New York: The euro touched its lowest level since July 2010 against the dollar amid concern Spain’s regional governments may lose access to capital markets.
The shared currency erased earlier gains against the dollar and yen after Catalan president Artur Mas repeated his call for Spanish central government to help regions access funding at briefing with reporters on Friday in Madrid. Brazil’s real rose against all its most-traded counterparts as the central bank said it will offer currency-swap contracts at auction.
“Catalonia headlines don’t tell us anything we didn’t know—autonomous region finances are awful—but the foreign-exchange market’s euro short-covering efforts this morning were immediately reversed,” said Kit Juckes, head of foreign-exchange research in London for Societe Generale SA. “The bears continue to look like they’re holding all the cards here, and $1.25 is still the key that unlocks the next leg down,” he added. In short-covering, investors end a bet that an asset will decline.
The euro was little changed at $1.2534 at 10.21am New York time after touching $1.2496, the least since 6 July, 2010. It was less than 0.1% weaker at 99.73 yen. The yen traded at 79.55 per dollar.
Spain’s government is analyzing with all caution requests from regional governments to help them regain access to capital markets, deputy prime minister Soraya Saenz de Santamaria said.
Spanish 10-year yields rose 13 basis points to 6.291%. They touched 6.51% on 16 May, the highest since November.
The euro fell 1.9% versus the dollar this week, taking its decline this month to 5%, after a Greek opinion poll showed an anti-bailout party gaining support before 17 June elections. It’s down 1.2% versus the yen in the past five days, leaving it down 5.6% in May.
Dennis Fitzgerald in New York, Emma Charlton in London and Angeline Benoit in Madrid contributed to this story.