Sun, Oct 23, 2011 - Page 10 News List

Euro falls ahead of debt crisis summits this week

Bloomberg

The euro dropped the most against the Swiss franc in almost two months and fell versus the yen as European leaders prepared for two summits over the next four days to battle the sovereign debt crisis.

The US dollar declined on Friday to a post-World War II low against the yen on speculation that the Federal Reserve may seek further monetary easing and bets the Japanese government will struggle to stem its currency’s gains. The Swiss franc rose this week against most of its major counterparts on demand for a refuge from Europe’s fiscal turmoil.

“I wouldn’t be holding my breath about the summit this weekend because the second summit coming next Wednesday means we probably won’t get anything concrete,” Eric Viloria, senior currency strategist at Gain Capital Group LLC in New York, said on Friday. “I would not be long on the euro, but I would not be surprised to see it rally with positive development from this meeting.”

A short is a bet an asset will drop.

The euro depreciated 1 percent to 1.2262 Swiss francs this week. It decreased 1.2 percent to ¥105.97 and traded at US$1.3896. The US dollar fell 1.2 percent to ¥76.29 after dropping on Friday to the post-World War II low of ¥75.82. It was the biggest weekly slide in the US currency since Aug. 12.

Implied volatility for the currencies of the G7 nations touched 13.3 percent this week, the highest level since Oct. 7, according to a JPMorgan Chase & Co index.

Sterling rallied to a six-week high against the US dollar after Britain’s budget deficit narrowed last month more than economists forecast, as British Chancellor of the Exchequer George Osborne’s spending cuts took hold.

The pound advanced 0.8 percent to US$1.5953 after rising on Friday to US$1.5974, the highest level since Sept. 9.

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