Reuters: US Dollar Report: FOREX-Euro slips to three-week low as Spain fears persist

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FOREX-Euro slips to three-week low as Spain fears persist Oct 1st 2012, 00:29 TOKYO | Sun Sep 30, 2012 8:29pm EDT TOKYO Oct 1 (Reuters) - The euro fell to a three-week low in early Asian trading on Monday, after an independent audit of Spain's banks failed to quell concerns about the country's progress towards a bailout needed to shore up its public finances. An independent audit released on Friday showed Spain's banking sector would need 59.3 billion euros in additional funds to cope with an economic downturn but Spain said it would ask for only 40 billion euros in European aid for its banks. Technical indicators for the euro suggest a decline, said Marc Chandler, global head of FX strategy at Brown Brothers Harriman in New York. "Over the last two weeks, we have been observing a deterioration in the tone of the major foreign currencies against the dollar," Chandler said in a weekend note to clients. "This has continued over the past week and looks set to continue." A likely cross of the euro's 5-day moving average below its 20-day moving average would confirm the downtrend, he said. The latter is now at $1.2883 and the former is now at $1.2868. A break of the $1.2775-$1.2800 area would signal another 1 to 2 percent decline, while a move above the $1.3000-50 area would be needed to signal any new leg higher, Chandler said. The euro stood at $1.2813, down 0.3 percent from Friday's late U.S. levels. On Monday, it fell as low as $1.2804, breaking below support at its 200-day moving average at $1.2823. Resistance is seen at $1.2960, the 38.2 percent retracement of its Sept. 17-27 slide. Despite the euro's weaker technical tone, currency speculators boosted bets against the dollar in the latest week to the highest in more than a year, according to data from the Commodity Futures Trading Commission released on Friday. The euro also skidded 0.4 percent against the yen, falling to 99.89, not far from a two-week low of 99.64 hit on Thursday. The dollar was slightly lower against the yen but off a more than two-week low of 77.43 yen hit on Friday, changing hands at 77.95 yen. The Bank of Japan's quarterly tankan survey of business sentiment released on Monday showed big Japanese manufacturers expect the dollar to average around 79.06 yen in the fiscal year through March 2013. Market reaction was muted to media reports that Japanese Prime Minister Yoshihiko Noda has decided to name Koriki Jojima, a senior lawmaker in the ruling Democratic Party of Japan, as the country's new finance minister in a cabinet shakeup due to take place later on Monday. Unease about Spain's situation pressured commodity currencies, with the Australian dollar slipping 0.3 percent to $1.0345, moving back toward a two-week low of $1.0328 reached on Wednesday. Link this Share this Digg this Email Reprints

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