Reuters: US Dollar Report: FOREX-Euro falls 1 pct vs yen, hits lowest since Nov 2000

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FOREX-Euro falls 1 pct vs yen, hits lowest since Nov 2000 Jul 23rd 2012, 07:21 Mon Jul 23, 2012 3:21am EDT * Euro hits near 12-year low on yen, all-time trough on Aussie * Worries about Spain weighing on single currency * USD and yen benefit from renewed risk aversion By Antoni Slodkowski TOKYO, July 23 (Reuters) - T he euro slid 1 percent against the yen, hitt ing its lowest level in more than 11-1/2 years on Monday, pressured by fears that Spain may eventually need a full sovereign bailout. The l ack of confidence kept Spanish bond s yields hover ing near the h ighest levels since the euro was created, d espite euro zone finance ministers approving on Friday terms for a loan of up to 100 billion euros for Madrid to recapitalise its banks. The common currency fell around 1 percent from late U.S. trade on Friday to as low as 94.4 15 y en, o n trading platform EBS, notching its lowest level since November 2000. Against the dollar, the euro sank below $1.2100 for the first time in more than two years, hitting a low of $1.2093 on EBS a nd cr eeping ever closer to the 2010 trough around $1.1876. "With such strong risk aversion it is the yen and the dollar that will keep gaining against risk currencies," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo. "The Spanish scenario has not been priced in yet." Over the weekend, the Spanish region of Murcia said it would seek government financial assistance, and media reported that half a dozen other regional governments were ready to follow in the footsteps of Valencia, which said on Friday it would seek help. Debt-ridden Spain was hit with more bad news on Sunday, when the tiny region of Murcia said it needed government financial help, and media reported half a dozen regional governments were ready to follow in the footsteps of Valencia, which called for assistance on Friday. "There is nothing good from Europe and that keeps the euro under pressure, especially for the first half of the week when we have euro zone data," said Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo. Euro zone consumer confidence and manufacturing reports were due on Monday and Tuesday. According to Reuters data, the euro hit an all-time low against the Australian dollar at A$1.1671, taking losses so far this month to more than 5 percent. It recovered a tad du ring the session to last stand at A$1 .1 731. Traders said fears of slower Chinese growth added to the gloom, ahead of flash HSBC manufacturing data on Tuesday. Later in the week, figures on U.S. and UK GDP are expected to show softness. "We're trending lower in the euro and this week you'll probably see a retracement in some of the recovery that we saw in riskier assets over the last week or so," said Greg Gibbs, strategist at RBS in Singapore. With risk aversion back on the rise, the safe-haven U.S. dollar and yen found good support. The dollar index jumped 0. 4 p ercent to 83.78 , e xtending Friday's 0.7 percent gain. The safe-haven Japanese currency rose 0. 6 percent on the greenback. The dollar last fetched 78.0 6, marking a seven-week l ow. With Asian bourses on the back foot, the Aussie gave up some of the gains made last week, when it posted a rise of 1.3 percent, by dropping 0. 7 p ercent to $1.02 0 9 9 <A UD=D4>. It scaled a 2-1/2 month peak of $1.0445 on Thursday, with stiff resistance lying at $1.0470-75 -- highs seen in late April. Talk of more stimulus from the U.S. Federal Reserve and diversification of central banks' currency holdings had bolstered the Aussie. Consumer inflation figures due on Wednesday could set the trend for the Aussie this week. Benign inflation data could raiseg speculation of another RBA interest rate cut, and put a drag on the Aussie. Link this Share this Digg this Email Reprints

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