Euro weakens against dollar, yen for second day
The euro weakened against the dollar and the yen for a second-straight day as stocks dropped and concern mounted that governments in the region will struggle to reduce their budget deficits.
The 16-nation currency retreated from near a five-month high against the dollar. The Stoxx Europe 600 Index slid 0.9pc.
Sovereign-rating downgrades are likely to persist because of deficits and demographic pressure on public finances, Standard & Poor’s said yesterday.
The Swiss franc appreciated against the euro after a consumer gauge climbed to the highest level in more than two years in August.
“The peripheral story is gaining momentum and is likely to take centre stage again,” said Lee Hardman, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd in London. “There’s very limited upside for the euro from here.”
The euro weakened to $1.3408 as of 9:10am in London, from $1.3455 in New York yesterday, when it traded at $1.3507, the highest level since April 20.
The euro bought 112.92 yen, from 113.41 yen. The US currency was at 84.22 yen, from 84.29 yen.
The dollar has depreciated 8.6pc versus the euro this quarter, the worst performance among 16 major counterparts and paring this year’s advance to 7.1pc.
The franc strengthened 0.4pc to 1.3210 against the European common currency.
UBS AG’s index of Swiss consumption, which aims to predict developments about three months ahead, climbed to 1.95 from a revised 1.88 in July, the Zurich-based bank said today in an emailed statement. That’s the highest since June 2008.
The cost of bailing out Anglo Irish Bank may exceed S&P’s previous €35bn estimate, Trevor Cullinan, a credit analyst at the ratings company, said in an interview broadcast by RTE Radio today.