Euro tumbles broadly on Tuesday as fears over eurozone financing weighed on the single currency and global equities. European banks on July 1 would have to repay 442 billion euros under the ECB’s Long-Term Refinancing Operation and investors were worried about the massive bank repayments to the ECB would result in a liquidity shortfall. Weaker-than-expected U.S. consumer confidence suggested the U.S. recovery remained fragile and investors flocked to the dollar and the Japaneses yen as safe-haven assets.
In addition, China’s leading economic indicators rose by 0.3% in April, less than the 1.7 % gain it reported on June 15. This was also its smallest gain in April in five months and investors were concerned that slowing growth in China could hurt global economic recovery.
The single currency edged higher to 1.2290 in Asian morning but euro extended Monday's decline and fell to 1.2151 after a report showed a steep fall in U.S. consumer confidence. Cross-selling in euro pressured price as eur/chf tumbled to a fresh lifetime low of 1.3165 while eur/gbp slumped to a fresh 1-year low of 0.8067.
Versus the Japanese yen, the greenback remained under pressure throughout the day. The pair fell sharply from 89.42 and despite a brief pullback from 88.56, renewed selling at 88.93 pushed price to 88.29 in NY mid-day on renewed risk aversion. The pair was also pressured by the release of a much weaker-than-expected U.S. consumer confidence, which came in at 52.9 in June versus the economists' forecast of 62.8 and well below the downwardly revised 62.7 in May.
Investors dumped risky assets such as stocks and euro for safe-haven currencies like the Japanese yen due to aforesaid recovery fears. DJI fell by 2.6% and ended the day below 10000 points at 9870. FTSE 100 dropped by 3.1%, CAC 40 fell by 4.0% and DAX slumped by 3.3%. Yen rallied across the board as aud/jpy plunged to 74.95 from 77.97, eur/jpy slid to a fresh 8-1/2 year low of 107.30 from 109.87 while gbp/jpy dropped to 132.85.
Economic data to be released on Wednesday include: Japan Manufacturing PMI , Construction orders , Housing starts , Germany Unemployment rate, U.K. GDP , Current Account, EU HICP , Swiss KOF indicator, U.S. ADP employment, Canada GDP.