FOREX-Euro falls on periphery worries; dollar bounces

* Euro falls broadly as peripheral bond spreads widen

* Concerns over Ireland’s fiscal position escalate

* Dollar gains some respite but outlook still gloomy

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By Neal Armstrong

LONDON, Nov 5 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) on Friday as
concerns over Ireland’s austerity budget prompted a widening in
peripheral euro zone bond spreads, in turn allowing the dollar
some respite from a run of heavy losses.

The premium investors demand to hold 10-year Irish
government bonds rather than German benchmarks rose to a euro
lifetime high after Dublin proposed a budget some traders said
was “unrealistic”. [ID:nLDE6A40HF]

Ireland is planning to push through spending cuts and tax
hikes worth 6 billion euros next year, the toughest budget in
its history, in a last-ditch effort to convince investors it is
not on the verge of financial meltdown. [ID:nLDE6A3168]

“The euro is down as real-money accounts are starting to
take a negative view on the euro zone periphery and the
potential impact that any restructure would have on European
banks,” said Stephen Gallo, head of market analysis at Schneider
Foreign Exchange.

European Central Bank Executive Board member Lorenzo Bini
Smaghi said on Monday the issue of a country being in a position
where it cannot repay debt could not be excluded.
[ID:nFLA1ME6DV]

Gallo said that with the Federal Reserve’s announcement on
further quantitative easing measures out of the way the market
was again focusing on the euro zone’s structural problems.

The euro was down 0.7 percent at $1.4097 versus the dollar
(EUR=: ), retreating from a 9 1/2-month high of $1.4283 reached
the previous day.

Traders said stop-losses were being hit all the way down,
while a surprise drop in German manufacturing orders also dented
euro sentiment. [ID:nLDE6A40WR]

The dollar was up around 0.5 percent versus a currency
basket (.DXY: ) at 76.235, bouncing from an 11-month low touched
on Thursday of 75.631 when investors took the Federal Reserve’s
decision to implement fresh QE on Wednesday as a reason to dump
the greenback.

The focus turned to U.S. monthly jobs data, with a weaker
number having the potential to reignite dollar selling.

“The Fed has made it clear that quantitative easing will
remain in place and there is enough slackness in the U.S.
economy. So any strong number is unlikely to offer much support
to the dollar,” said Ian Stannard, senior currency strategist at
BNP Paribas.

Economists polled by Reuters expect 60,000 jobs were created
in October after 95,000 were lost in September. That is seen as
too feeble a signal to imply any meaningful shift in the
stagnant labour market. As a result the unemployment rate is
expected to remain sticky at 9.6 percent. [ID:nN02101041].

The Australian dollar (AUD=D4: ) fell 0.4 percent to $1.0094,
having risen to a 28-year high of $1.0183 earlier after a robust
quarterly bulletin from the Reserve Bank of Australia.

That contrasted with the Fed’s commitment to buy more
Treasuries, implying ultra-loose monetary policy, which renewed
the focus on the dollar as a funding currency for purchases in
commodities, emerging markets and higher-yielding currencies.

The dollar was flat against the yen, at 80.85 yen after the
Bank of Japan (BOJ) concluded a policy review without easing
further. The yen firmed slightly after the announcement on
disappointment that the bank had not unveiled any expansion of
its asset buying plan in response to the Fed.

(Additional reporting by Anirban Nag)

FOREX-Euro falls on periphery worries; dollar bounces