EUR Drops over 1% versus the USD

 @ibtimes on May 06 2010 6:05 AM

The EUR dropped to a 14 month low against the Dollar yesterday, reaching below 1.2800, as fears intensified over the spreading Euro-Zone debt crisis. As protests in Greece intensify, investors are concerned the €110 billion ($143 billion) aid package to Greece will not ensure solvency in Greece. Furthermore, concerns mount regarding Portugal, Spain and other weak economies in the Euro-Zone could. A warning by Moody's that it could cut Portugal's “Aa2” sovereign rating by as much as two notches sent the EUR to its lowest level since March 2009.

The EUR is currently trading at $1.2837 and is at 120.39 Yen. The Pound is at $1.5123, ahead of today's general election. While the consensus still points to a hung parliament, the conservative party has been gaining ground in recent days. A decisive victory of the conservative party will likely provide support for the Pound.

Today, investors should keep pay attention to the ECB interest rate meeting and statement at 12:30 GMT. While the European Central Bank is expected to keep rates on hold, investors should focus on the meeting minutes and any comments on the spreading Euro-Zone debt issues and future direction of monetary policy.

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