FOREX-Euro hits fresh 14-mo low vs dlr on growth worries

* Euro hits fresh 14-month low vs dollar

* Growth concerns from austerity measures under spotlight

* Dollar on firm footing

(Updates prices with latest euro fall)

By Natsuko Waki

LONDON, May 14 (BestGrowthStock) – The euro hit fresh 14-month lows
on Friday as concerns intensified that fiscal austerity measures
in the euro zone would dampen a fragile recovery and spark
social unrest.

After rising to around $1.31 following last week’s agreement
of an emergency $1 trillion anti-crisis package, the euro has
been under pressure for most of this week as investor focus has
shifted to the impact on growth from tightening fiscal policy.

Portuguese leaders agreed tough austerity measures on
Thursday, after neighbouring Spain announced similar measures
involving reductions in civil service pay and job cuts that
provoked talk by Spanish unions of a general strike.

In Greece, social unrest is escalating after the country
took belt-tightening measures. Three people were killed during a
protest last week.

“The euro hasn’t derived any benefits from any budget cuts
from Spain and Portugal,” said Chris Turner, head of FX strategy
at ING.

“People are either concluding that these cuts will be
unsuccessful and debt sustainability remains a key issue, or
they will be successful in aggressive fiscal tightening and that
these economies would slow aggressively and that the European
Central Bank has to keep interest rates low.”

By 0820 GMT, the euro erased early gains and fell as low as
$1.2503 (EUR=: ) its weakest since March 2009, led by large
selling by macro hedge funds.

Traders said large stop-loss orders were placed at $1.2499,
a break of which would prompt a swift fall to $1.2480.

The euro has fallen more than 12 percent against the dollar
and yen this year, making it the biggest loser among major
currencies.

The euro was trading at 115.94 (EURJPY=: ), down 0.15 percent
and near this week’s low.

The euro held steady at 1.4015 Swiss francs (EURCHF=: ), near
Thursday’s all-time low, with investors focusing on whether the
Swiss National Bank would return to the market to weaken the
franc.

Japan’s Kokusai Asset Management, the world’s second-biggest
bond fund after PIMCO, cut the euro exposure on its Global
Sovereign fund by 4.8 percentage points since end-March to 29.6
percent on May 10 as the euro zone’s debt crisis intensified.

The fund also cut its exposure to the British pound and the
yen, its managers said, but its weightings rose in bonds
denominated in U.S. and Canadian dollars. [ID:nTOE64C07N]

The dollar has drawn support from inflows from investors
fleeing the euro zone and partially by expectations that the
recovery in the U.S. was on much more solid ground.
[ID:nN13233348].

It was steady at 92.65 yen (JPY=: ) while it rose 0.3 percent
versus a basket of major currencies to 85.497 (.DXY: ).

“I think we are at the point where, whichever way you think
the world is going to go – boom or bust – the dollar index (Read more about the global trade. ) will
probably head higher,” said Adam Carr, senior economist at ICAP.

“It’s already had a solid run, but love for the euro is
almost non-existent at the moment and the U.S. economy is
staging a decent bounce back. I don’t know if there is a near-
term catalyst to change the euro’s fortunes.”

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FOREX-Euro hits fresh 14-mo low vs dlr on growth worries