Euro plumbs new depths on Swiss franc, Aussie

By Wayne Cole

SYDNEY (BestGrowthStock) – The euro continued its slow descent on Wednesday as a steady drip of grim ratings news eroded confidence in the single currency, dragging it to record lows on the Swiss franc and Australian dollar.

The latest blows came from Moody’s, which warned it might cut Portugal, and Fitch, which did the same favor for Greece.

“Though one might suppose that the market had become somewhat desensitized to such news, evidence suggests otherwise as periphery-bund spreads widen again and EUR remains under pressure,” said David Watt, senior currency strategist at RBC Dominion.

A dearth of liquidity and talk of bids from Asian central banks helped limit the euro’s fall against the U.S. dollar to a trough of $1.3073 and in early Asia the single currency had steadied at $1.3097, right on its 200-day moving average.

But it fared less well against the safe-haven Swiss franc and high-yielding Australian dollar.

“EUR/CHF is going deeper into uncharted territory having broken 1.26, and continuing to dig deeper,” noted Watt, as the euro slid to 1.2548 francs for a loss of almost 4 percent so far this month.

“From near A$2.0 in March 2009, EUR/AUD has been under relentless downward pressure,” he added. “The recent move suggest an acceleration to the downside, with 1.30 in focus.”

The euro was down at A$1.3126 after shedding two cents in as many sessions. For the year, it is off 17 percent.

The Australian currency was underpinned by further gains in equities and commodities which spoke of improving risk appetite as analysts revised up forecasts for global growth in 2011.

The S&P 500 (.SPX: ) on Tuesday finally recovered all the ground lost since the Lehman debacle, while the CRB commodities index (.CRB: ) claimed a two-year peak.

All of which helped the Aussie up on the U.S. dollar to $0.9981, a gain of over 11 percent for the year.

The U.S. currency fared better on sterling, which took a swipe from news of a record UK. borrowing requirement and slipped to a near three-month low at $1.5463.

The US dollar index (Read more about the global trade. ) (.DXY: ) was up a modest 0.07 pct at 80.687, which makes a gain of 3.6 percent for the year but still leaves it far below the June peak of 88.708.

While the dollar has gained ground on the euro this year, it has had no such luck on the yen being down almost 10 big figures since the end of 2009. On Wednesday it was going nowhere at 83.74 yen, sandwiched between bids under 83.50 and offers above 84.50.

Japanese trade figures due later Wednesday are expected to show a pick up in exports for November, echoing strength seen in other Asian exporters recently.

The UK and US release their latest estimates for gross domestic product (GDP) for the third quarter. Growth in the United States is likely to be revised up to an annualized 2.8 percent, from 2.5 percent previously.

More importantly, recent upbeat data on consumer spending has led analysts to sharply lift forecasts for growth this quarter, while the surprisingly aggressive package of tax cuts agreed this month has boosted estimates for all of 2011.

(Editing by Narayanan Somasundaram)

Euro plumbs new depths on Swiss franc, Aussie