FOREX-Euro hurt by mounting debt worries

* Euro slides to fresh two-month low vs dlr (EUR=: )

* Portuguese govt spokesman denies bailout pressure report

* Dollar rises broadly, Aussie tumbles on rate view

(Updates prices, details)

By Neal Armstrong

LONDON, Nov 26 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) to a fresh
two-month low against a resurgent dollar on Friday as mounting
speculation that Portugal will need to follow Ireland in seeking
financial aid further unsettled nervous investors.

The Australian dollar tumbled after its central bank quashed
hopes of an imminent rise in interest rates and the yen hit a
seven-week low against the dollar, with fresh sabre-rattling by
North Korea helping the U.S. currency.

Investors rattled by Ireland’s debt problems have pushed the
borrowing costs of Portugal and Spain, seen as the next weakest
euro zone peripheral states, to record highs.

European officials denied “absolutely false” reports
Portugal was under pressure to seek a bailout and Spain ruled
out on Friday needing help to manage its finances, despite fears
of a spreading euro debt crisis. [ID:nLDE6AP08Y]

Pressure on the euro has intensified as the spiralling debt
crisis threatens to ensnare bigger countries such as Spain and
Italy, while a small number of experts — mostly not market
participants — have even begun to speculate about the euro
zone’s very existence.

“Peripheral issues are unlikely to go away in the short term
and the euro will remain under pressure into the end of the
year,” said Manuel Oliveri, currency strategist at UBS in

The euro (EUR=: ) fell more than 1 percent on the day to
$1.3217, having dropped to as low as $1.3200, its lowest since
late September, and taking out option barriers at $1.3250 along
the way. Traders cited reports of major Asian sovereign demand
placed into $1.3200.

“Our data shows there are noticeable bond outflows from
Spain and Italy, which suggests investors are becoming more
unsettled,” said Simon Derrick, head of currency research at
Bank of New York Mellon.

“The case looks set for further euro weakness,” he said.

Technical analysts highlighted the break of support at
$1.3232, the 61.8 percent retracement of the euro’s August to
November rally, adding the 200-day moving average at $1.3131 was
the next key level to watch.

The euro also shed 0.7 percent against the yen (EURJPY=R: )
and 0.8 percent to the Swiss franc (EURCHF=: ) as reports that
senior bondholders would share the cost of rescuing Ireland’s
banks weighed down on financial markets. [ID:nLDE6AP0BY]


TAKE A LOOK- Europe’s debt problems [nLDE68T0MG]

Euro zone debt struggle

Multimedia on Euro zone crisis

EU bailout graphic

Euro zone debt graphic

Interactive timeline



In contrast, the safe-haven status of the dollar got a boost
after North Korea said impending military exercises by South
Korea and the United States were pushing the region towards war,
days after it launched its heaviest bombardment of the South
since the 1950-53 Korean War. [ID:nL3E6MQ058]

The dollar (JPY=: ) rose 0.35 percent to 83.84 yen, having
briefly touched 83.97, a level last seen in early October, and
rising further from a 15-year low of 80.21 yen hit at the
beginning of this month.

Rising optimism on the U.S. economy favoured the dollar,
with a fall in jobless claims published on Wednesday fuelling
speculation that next week’s monthly non-farm payrolls data
could be strong as well, traders said.

The dollar index (Read more about the global trade. ) (=USD: ) (.DXY: ), which tracks the greenback’s
performance against a basket of six major currencies, rose to a
two-month high of 80.381.

The Australian dollar fell sharply as Reserve Bank Governor
Glenn Stevens dampened any prospect of an imminent interest rate
hike, saying rates were just right and the bank might not move
on policy for some time. [ID:nWLF004926]

The Aussie was down 1.8 percent to $0.9628 (AUD=D4: ),
dropping below its 55-day moving average of $0.9777 and hitting
a seven-week low of $0.9632.

For an analysis of the outlook for commodity currencies, see

(Editing by Patrick Graham)

FOREX-Euro hurt by mounting debt worries