The single currency fell below 1.2400 for the first time since November 2008 on lingering worries that austerity plans as required by the 750-billion euro bailout package would stifle an 'already-weak' recovery in the 16-country eurozone. Former Fed Chairman Paul Volcker said he was concerned that the euro area may break up while ECB's Weber said dangers were still in the financial system and such risk should not be underestimated. German Chancellor Angela Merkel's comments that Europe is in a 'very, very serious situation' put extra pressure on euro.
Euro bashing continued to pressure the single currency on Friday as the pair was sold on every intra-day rebound. Despite brief rebound to 1.2576 on short-covering, euro tumbled again and fell below last week's low of 1.2510 to 1.2432 in European mid-day. Although euro managed another rebound, renewed selling at 1.2534 pushed the single currency lower again and price nose-dived to a fresh 18-month low of 1.2354 in NY afternoon. Cross-selling in euro also weighed on the price as eur/jpy plunged from 117.02 to 113.50 while eur/gbp fell sharply from 0.8620 to 0.8501. In other news, report showed Greece would submit a deficit-cutting progress report to EU this coming Saturday.
Although the British pound fell sharply fm 1.4640 to as low as 1.4496 in tandem with euro on Friday, as cross buying in sterling versus the single currency somehow contained cable's downside, the pound gyrated inside the said range in NY session as the market focus on Friday was euro instead of cable.
The Japanese yen rallied across the board as Greek debt crisis sparked risk aversion again, prompting investors to dump riskier assets like stocks for yen and dollar as safe haven currencies. Aud/jpy tumbled from 83.41 to 81.42 while gbp/jpy fell from 136.05 to 133.24 and usd/jpy also slumped from 93.10 to 91.80. DJI ended the day down by 1.51% at 10620.16.
Economic data to be released next week include : U.K. Rightmove house prices, Japan Domestic CGPI, Japan Domestic CGPI, U.K. CBI industrial trend, U.S. Empire state mfg. and Net LT TIC flows and NAHB housing mrkt index on Monday, Japan Tertiary industry index, Consumer confidence, Machine tools orders, U.K. CPI, Germany ZEW index, EU Trade balance ,HICP, U.S. Building permits and PPI on Tuesday, Japan Capacity utilisation, Industrial production, Canada Wholesale sales, U.S. CPI and FOMC minutes on Wednesday, Japan GDP , Germany PPI, U.K. Retail sales, Canada Leading indicators and U.S. Leading indicators on Thursday, Japan Leading indicators, Germany GDP, PMI, EU PMI, Germany Ifo index, EU Current account, Canada CPI and Retail sales on Friday.