Market News|December 4, 2010 10:03 pm

Bailouts In Europe Weaken EUR

Last month countries protested the US Central Banks decision to pump $600B into the economy over the next 8 months. As a consequence the dollar dropped against all currencies unanimously. Complaints and pressure would have mounted but for the EMU debt crisis.

EUR/USD has dropped back to mid 1.32 region at the start of the European session. With decision on Portugal still under consideration, European stocks continued to be sluggish. The markets tend to feel a bailout will be necessary.

Ireland’s EUR 85B loan and Portuguese bailout has left visible holes in the European economy. While rest of Europe tries to manage problem, the bond markets responded; with the Spanish-German 10yr bond spread rising 28 basis points to a high of 295. The EUR is continuing on a strong bearish trend

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