Euro down against dollar

The euro lost ground on the dollar today after the Netherlands and Finland did not back a plan that would see the euro region’s permanent bailout fund purchase government bonds within the secondary market.

This led to fresh uncertainty about a summit deal agreed last week to tackle the eurozone’s debt crisis in which leaders opted to make rescue funds available in order to stabilise bond markets. This, along with moves to implement a common banking union, resulted in the single currency’s biggest single day percentage increase in eight months versus the greenback on Friday.

However, even amid those gains, traders had warned that the euro was expected to remain under pressure prior to this week’s European Central Bank meeting, in which the bank is likely to ease policy.

Markets in the US will not open on Wednesday because of the country’s Independence Day holiday which could also lower liquidity before the ECB meeting. However, as New York trading got underway today, investor sentiment was largely linked to the Finnish government saying the rescue fund’s bond purchasing from secondary markets would need unanimity and that would appear unlikely as both the Netherland and Finland are opposed.

The common currency was last seen trading at $1.2588, 0.6 per cent down on the day.