FOREX-Euro hit on fiscal tightening concerns

* Euro (EUR=: ) within half a U.S cent of 14-month low vs dlr

* Option-related stop-losses hit through $1.2600

* Fiscal tightening requirements weigh on single currency

* Euro hits record lows vs Swiss franc

(Adds quotes, updates prices)

By Neal Armstrong

LONDON, May 13 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) to a one-week low
up on Thursday, as looming fiscal tightening requirements in the
euro zone outweighed the benefits of an aid package aimed at
shoring up euro zone bond markets.

A $1 trillion rescue deal hammered out at the weekend by
global policymakers had eased investor worries a Greek sovereign
debt crisis will spread.

However, concerns about the ability of fiscally weaker
states to make necessary budget cuts and about the impact on
growth continue to weigh on the euro.

“Fiscal tightening in the euro zone is going to be
broad-based and this is negative for the euro,” said Ian
Stannard, senior currency strategist at BNP Paribas.

Passage of the rescue deal has boosted risk appetite this
week, providing a temporary floor to the single currency.

But by 0925 GMT, the euro had given back earlier gains to
trade down 0.3 percent versus the dollar (EUR=: ) at $1.2580,
bringing last week’s 14-month low of $1.2520 back into focus.

Traders said short-dated option-interest at $1.2600 had been
targeted in holiday-thinned trade with stops triggered
underneath. More stops were said to be lurking under $1.2550.

“There are question marks over the austerity measures
required in the southern European states and that makes the euro
vulnerable,” said Jeremy Stretch, currency analyst at Rabobank.

The euro fell (Read more about the trembling euro. ) 0.5 percent versus the yen (EURJPY=R: ) to
117.00 yen as European stocks turned negative (.FTEU3: ). Euro/yen
fell to an eight-year low of 110.49 yen on trading platform EBS
last week as global stocks tumbled on risk aversion related to
the euro zone debt crisis.

The single currency hit a record low versus the Swiss franc
(EURCHF=: ) of 1.3997, according to EBS.

The dollar was up around 0.1 percent against the yen (JPY=: )
at 93.28 yen. Versus a basket of currencies (.DXY: ), the
greenback was up 0.3 percent at 85.038. The index hit a 1-year
high of 85.268 last week.

The Australian dollar trimmed gains to trade up 0.5 percent
at $0.8980 versus the U.S. dollar. Australian employment data
came in stronger than expected earlier, pushing the currency
back above $0.9000. [ID:nSGE64C03O]

Analysts said interest rate rises from the Reserve Bank of
Australia may be limited by external factors, potentially
capping further Aussie gains.

“Despite the RBA’s increasing concerns over the inflation
outlook and a tightening in the labour market, we think global
factors dominate and expect the RBA to stay on the sidelines for
the next couple of months,” said Su-Lin Ong, senior economist at
RBC Capital.

Sterling fell 0.3 percent versus the dollar (GBP=D4: ) to
$1.4780, hit by a fall in risk appetite and as UK trade data
showed the deficit widening more than expected in March.

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(Editing by Toby Chopra)

FOREX-Euro hit on fiscal tightening concerns