FOREX-Debt worries drive euro to 10-week low vs dollar

* Euro hits 10-week low vs dollar, yen, Swiss franc

* Single currency dented by growing contagion fears

* Peripheral bond spreads widen, no lift from Irish deal

By Jessica Mortimer

LONDON, Nov 30 (BestGrowthStock) – The euro hit its lowest in 10
weeks against the dollar, yen and Swiss franc on Tuesday after a
weekend rescue package for Ireland failed to calm worries that
bailouts would be needed in other euro zone countries.

The premiums investors demand to hold Spanish and Italian
sovereign bonds over German debt hit their highest since the
euro’s launch and some of the region’s “core” debt issuers,
including France, were pressured. [GVD/EUR]

An 85 billion euro deal for Ireland, agreed by European
Union finance ministers on Sunday, failed to stop euro zone
peripheral bond yields rising sharply on Monday, reflecting a
lack of confidence the deal would contain the euro zone’s debt
crisis.

“Markets are very downbeat on the euro zone periphery, not
just about Portugal but also Spain and Italy,” said Stephan
Maier, currency strategist at Unicredit in Milan.

“The euro has had a hard fall and has not been lifted by the
finalising of the Irish rescue deal”.

He added, however, that the euro may have strong support
ahead of the psychologically key $1.30 level, particularly as
much of the bad news on the euro zone may be priced in after a
fall of around 8 percent in euro/dollar since its peak earlier
this month.

The euro fell (Read more about the trembling euro. ) 0.8 percent on the day against the dollar
(EUR=: ) to $1.3008, its lowest since Sept. 16. It stayed well
below its 200-day moving average at $1.3127.

The single currency also slid to 1.2990 Swiss francs
(EURCHF=R: ) and 109.35 yen (EURJPY=R: ), both 10-week lows.

“With euro positioning nowhere near any extreme there is
more scope for downside over the coming sessions,” a
London-based trader said.

“Flows retained a negative euro bias with macro funds
selling euro cash and positioning to the downside via options.”

The latest positioning data from the Commodity Futures
Trading Commission showed speculators going net short on the
euro for the first time since Sept. 14 [IMM/FX].

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Euro zone debt timeline: http://link.reuters.com/nyx95q

Take a Look on Irish bailout: [ID:nLDE68T0MG]

Euro zone crisis : http://r.reuters.com/hus75h

Graphic on debt problems: http://r.reuters.com/zem66q

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

“There are just so many worries over the euro zone. The euro
will test the $1.20-1.25 area this month. I think it could fall
to $1.20 in the first quarter of next year,” said Hideki
Amikura, forex manager at Nomura Trust and Banking in Tokyo.

DOLLAR GAINS

Against a basket of currencies, the dollar (.DXY: ) rose 0.5
percent to a two-month high of 81.278, as safe-haven flows and
recent evidence of an improving U.S. economy supported the
greenback.

The dollar slipped 0.2 percent to 84.04 yen (JPY=: ), pulled
back by month-end selling by Japanese exporters, but still close
to Monday’s two-month high of 84.41.

The higher-yielding Australian dollar (AUD=D4: ) slipped 0.4
percent to $0.9595, dented by falls in Chinese shares (.SSEC: )
and risk aversion as a result of the euro zone crisis.

The Aussie erased earlier gains made after a batch of
Australian economic data lessened the risk of unwelcome weakness
in third-quarter GDP due on Wednesday. [ID:nSGE6AS0GX]

(Additional reporting by Hideyuki Sano in Tokyo)

FOREX-Debt worries drive euro to 10-week low vs dollar