With the return of European markets, pessimism returns once again to dominate high yielding currencies as worries return to affect the sentiment again, which deteriorated already as European investors started to weigh the impact of the downbeat U.S. jobs report, the thing that led high yielding currencies to the downside as investors attempt to avert as much risk as possible.
Moreover, European investors are also worried over the situation in Spain, the fourth largest economy in the euro-area region, where the tension returned to debt market once again, spreading jitters across the board and pressuring the confidence to weaken, especially after Italian and Spanish bonds declined, while borrowing costs kept on surging.
The Spanish Premier, in attempts to control the deficit, met yesterday the health and education ministers for more possible cuts worth around 10 billion euros, where Rajoy keeps on providing more attempts to avoid seeking bailout such as Greece, Ireland and Portugal, in order to reduce the deficit to 3.0% of GDP.
On the other hand, Charles Dallara, head of the Institute of International Finance, clarified that the excess of short-term cuts and austerity might weigh sharply on growth and threatens the European economy itself. Dallara also called on European lawmakers to expand the capacity of the European rescue fund in order to shield larger economies from the debt crisis.
Yet, the bearishness was slightly limited as seen on the European common currency due to the German upbeat trade figures, where the trade surplus widened in February, driven by the unexpected expansion in exports.
The euro depreciated against the U.S. dollar, where the EUR/USD pair shed to a low of $1.3063 after recording a high of $1.3143 previously during the day, noting that the pair trades in the moment around $1.3067 and opened the session at $1.3104.
The Sterling pound followed the sentiment and declined sharply today, where the pound hit a low of $1.5823 against the U.S. dollar, after the opening of $1.5888. The pair trades now around $1.5822.
The dollar index (USDIX), which tracks the dollar's movement against other majors, soared today reaching a high of 79.97 after recorded the lowest at 79.61. The index is trading around 79.96 now, compared with the opening of 79.78.