Euro hits five-year low against yen
Published: 10 Jul at 3 PM
The euro was weak close to a two-year low versus the dollar and fell to a five-week trough against the yen today after a eurozone finance ministers meeting offered no positive solutions, with sentiment cautious as the focus turned towards a court hearing in Germany.
Eurozone ministers reached an agreement to give Spain an additional year, until 2014, to hit its targets for deficit reduction in exchange for more budget savings and put the parameters in place for an aid package for the troubled country’s ailing banks. However, they have seemingly made no progress on activating the region’s rescue funds to mediate in bond markets to reduce Italy and Spain’s soaring borrowing costs.
Elsewhere, Germany’s constitutional court is set to hear a complaint on Tuesday about the eurozone’s rescue fund’s ratification and the implementation of tough budget rules. Markets hope a quick verdict is reached but some analysts claim a decision may potentially take several weeks, keeping Europe in a state of uneasiness and possibly adding to brief sentiment towards the single currency. The court is not regarded as pro-Europe, and any adverse verdict may hurt integration plans.
The common currency dropped by 0.3 per cent to $1.2280, heading back towards the two-year low of $1.2225 from the previous day on the EBS trading platform. It also hit a five-week low against the yen of 97.32 on the same platform.