The Euro has weakened for a second day against the Pound and slumped against the US Dollar after the resignation of two Portuguese ministers from the nation’s government reignites speculation that the Euro crisis will hit back in full force.
The single currency tumbled by its biggest margin in two weeks against the Japanese Yen as borrowing costs leapt in Spain, Italy and Portugal. Investors turned to the safe haven of the Yen, US Dollar and Sterling.
As a result of the political uncertainty borrowing costs in Portugal rose above 8% for the first time since November 2012.
“The Euro is being driven by the headlines coming out of Portugal,” said Paul Robson, a senior currency strategist at Royal Bank of Scotland. “In the past, markets have penalized currencies where you’ve got political concerns and a weak political backdrop. There’s been a lot of complacency about the Euro-area’s periphery in general during the liquidity drench which has seen people hunting for yields.”
The issues in Portugal have combined with weaker-than-expected Eurozone Purchasing Managers Index data to weigh the currency down. Despite the data coming in below economist expectations the data has edged up to 48.7 in June, closer to the 50 mark needed to mark expansion.
Chris Williamson, chief economist at Markit said, “The sub-50 PMI reading for June indicates that the Euro area recession has extended into a record seventh consecutive quarter. The survey is broadly consistent with GDP falling by 0.2% in the second quarter, similar to the decline seen in the first three months of the year. However, there is good reason to believe that the region is stabilizing and on course to return to growth during the second half of the year.”
Improved retail sales data released on Wednesday did little to distract investors concerned over the Portugal situation.
Current Euro (EUR) Exchange Rates
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2954
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8505
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4259
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6724
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7731
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1720
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7017
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.5979
(Correct as of 10:25 am GMT)
