Forex Market Update: Euro Falls Amid Political Crisis in Portugal
The euro edged lower against the U.S. dollar on Wednesday as news of resignation of several cabinet ministers from the Portuguese government, fanned fears over possible reemergence of the debt crises in the troubled monetary union.
Earlier during the day, the euro fell 0.3% against the dollar to trade at $1.2923, its lowest level against the U.S. unit since May.
The Portuguese government is in danger of collapsing. After the Portuguese Prime Minister refused to accept the resignation letter from the country’s foreign minister on Tuesday, news reports said that two more cabinet ministers are preparing to resign from their posts.
Yields on Portuguese bonds jumped while European equities tumbled as investors fear that the contagion could also spread to other struggling peripheral economies of the euro zone such as Greece, Italy and Spain.
The common currency also fell more than 1% against the safe-haven yen to trade at 129.01 on EBS trading platform, showed a data provided by Reuters.
The euro’s slump against the yen also weighed on the U.S. dollar which fell more than 1% to trade at 99.42 yen.
However, analysts expect the U.S. dollar to rebound if Friday’s non-farm data show solid numbers. But before that, investors will be keen to know the ADP’s private sector employment and Institute of Supply Management’s non-manufacturing data later today.
Strong economic data will raise the possibility of early tapering of the Federal Reserve’s bond purchase program, which in turn will be supportive for the U.S. dollar.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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