Reuters: US Dollar Report: FOREX-Euro feels Asia heat as Spanish fears prevail

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FOREX-Euro feels Asia heat as Spanish fears prevail Jul 23rd 2012, 03:04 Sun Jul 22, 2012 11:04pm EDT * Euro hits 12-year low on yen, all-time trough on Aussie * Worries about Spain, Greece weighing on single currency * USD & yen benefit from renewed risk aversion By Antoni Slodkowski TOKYO, July 23 (Reuters) - The euro fell to a near 12-year trough against the yen and plumbed record lows versus the Australian dollar on Monday, starting the week under pressure from fears that Spain may eventually need a full sovereign bailout. Such was the lack of market confidence that Spanish bond yields hit their highest levels since the euro was created, even as euro zone finance ministers approved the terms of a loan of up to 100 billion euros on Friday for Madrid to recapitalise its banks. The euro bought 94.77 yen, having fallen as far as 94.74, a trough not seen since November 2000. Against the greenback, it hit a 25-month low around $1.2103 , creeping 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." The euro reached an all-time low against the Australian dollar at A$1.1671, taking losses so far this month to more than 5 percent. Also weighing on the single currency was a report in Germany's "Der Spiegel" magazine on Sunday, suggesting without citing sources that the IMF may not take part in any additional financing for Greece. Traders said fears of slower Chinese growth added to the gloom, ahead of HSBC manufacturing data on Tuesday. Later in the week there are figures on U.S. and UK GDP that 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 rose 0.3 percent to 83.69, extending Friday's 0.7 percent gain. The safe-haven yen rose 0.4 percent on the greenback. The dollar last fetched 78.19, marking a seven-week low. With Asian bourses on the back foot, the Aussie, which posted a solid 1.3 percent rise last week despite Friday's pullback, tumbled 0.6 percent to $1.0310. It scaled a 2-1/2 month peak of $1.0445 on Thursday, brushing against stiff resistance 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, the outlook for which this week hinges on consumer inflation figures due on Wednesday. Benign inflation data could take some momentum from the currency by raising speculation of another RBA interest rate cut. Link this Share this Digg this Email Reprints

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