NEW YORK: The euro fell against most major currencies on Wednesday after comments from German Chancellor Angela Merkel cited in a media report raised concerns about the future of the euro zone and rattled investors already concerned about the outlook for the common currency.
�We have not yet shaped the European project in a way that we can be sure that everything will turn out well, we still have work to do,� Merkel said. However, she added that she was �optimistic that we will succeed,� a reiteration of her usual line on the survival of the euro.
The comments were contained in an interview posted on Merkel�s Christian Democratic Union party�s website, according to a media report.
The common currency sold off across the board following her comments, falling to a session low against the US dollar, a record trough against the Australian dollar, an 11-1/2-year low versus the Swedish crown, and a fresh 3-1/2-year low against sterling. Euro zone peripheral bond yields also rose, adding to downbeat market sentiment.
�The initial move lower was purely a result of Merkel�s comments � the very fact that there is a seed of doubt has undermined the euro,� said Tommy Molloy, chief dealer at FX Solutions in Ridgewood, New Jersey.
The euro fell 0.2 percent against the US dollar to $1.2276, falling to session lows of $1.2215, not far from a two-year low touched last week, as traders seized on the first part of Merkel�s statement.
Comments from European Central Bank policymaker Joerg Asmussen over the future of the euro zone�s permanent bailout fund and Europe�s growing north-south divide also weighed on the currency, market players said.
On Tuesday, the euro gained against the dollar after US Federal Reserve Chairman Ben Bernanke gave few clear hints about another round of quantitative easing, although he left the door open to more of these measures to boost growth in the world�s biggest economy.
HSBC echoed TD�s view, adding that the Fed will ease only if the labour market does not show signs of improvement.
But as it stands, the Fed will not have another employment report available to consider at its next meeting on July 30-Aug. 1, but it will have had two monthly jobs data by the following monetary meeting on Sept. 12-13.
So the earliest the Fed could act if necessary would be in September, HSBC said.
The dollar slipped 0.4 percent against the yen to 78.75 yen .
The overall trend was still for a weaker euro given concerns about high Spanish and Italian bond yields and concerns Spain will not be able to avoid a full-scale bailout.
Bad loans at Spanish banks hit an 18-year high in May at 8.95 percent of outstanding portfolios, up from 8.72 percent in April, Bank of Spain data showed.
The euro slipped 0.6 against the Japanese yen to 96.67 yen , eyeing a six-week low touched on Monday as investors sought safer ground, including bonds offering negative yields in countries such as Germany and Finland. Germany sold two-year bonds at a negative yield at auction for the first time on Wednesday.�Reuters
�We have not yet shaped the European project in a way that we can be sure that everything will turn out well, we still have work to do,� Merkel said. However, she added that she was �optimistic that we will succeed,� a reiteration of her usual line on the survival of the euro.
The comments were contained in an interview posted on Merkel�s Christian Democratic Union party�s website, according to a media report.
The common currency sold off across the board following her comments, falling to a session low against the US dollar, a record trough against the Australian dollar, an 11-1/2-year low versus the Swedish crown, and a fresh 3-1/2-year low against sterling. Euro zone peripheral bond yields also rose, adding to downbeat market sentiment.
�The initial move lower was purely a result of Merkel�s comments � the very fact that there is a seed of doubt has undermined the euro,� said Tommy Molloy, chief dealer at FX Solutions in Ridgewood, New Jersey.
The euro fell 0.2 percent against the US dollar to $1.2276, falling to session lows of $1.2215, not far from a two-year low touched last week, as traders seized on the first part of Merkel�s statement.
Comments from European Central Bank policymaker Joerg Asmussen over the future of the euro zone�s permanent bailout fund and Europe�s growing north-south divide also weighed on the currency, market players said.
On Tuesday, the euro gained against the dollar after US Federal Reserve Chairman Ben Bernanke gave few clear hints about another round of quantitative easing, although he left the door open to more of these measures to boost growth in the world�s biggest economy.
HSBC echoed TD�s view, adding that the Fed will ease only if the labour market does not show signs of improvement.
But as it stands, the Fed will not have another employment report available to consider at its next meeting on July 30-Aug. 1, but it will have had two monthly jobs data by the following monetary meeting on Sept. 12-13.
So the earliest the Fed could act if necessary would be in September, HSBC said.
The dollar slipped 0.4 percent against the yen to 78.75 yen .
The overall trend was still for a weaker euro given concerns about high Spanish and Italian bond yields and concerns Spain will not be able to avoid a full-scale bailout.
Bad loans at Spanish banks hit an 18-year high in May at 8.95 percent of outstanding portfolios, up from 8.72 percent in April, Bank of Spain data showed.
The euro slipped 0.6 against the Japanese yen to 96.67 yen , eyeing a six-week low touched on Monday as investors sought safer ground, including bonds offering negative yields in countries such as Germany and Finland. Germany sold two-year bonds at a negative yield at auction for the first time on Wednesday.�Reuters
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