The Euro has weakened against the US Dollar and Japanese Yen as investors seek shelter in the safe-havens as political unrest in Spain threatens to undermine a Eurozone recovery and deepen the debt crisis.
Turmoil continues in Spain as the Spanish Prime Minister Mariano Rajoy faces increased calls from opposition leaders to resign after he was caught in the centre of a corruption scandal. Allegations that he and leading members of his ruling people’s party received illegal payments have sparked protests across the country with violent clashes taking place in the capital of Madrid.
Tomorrow Spain is scheduled to auction debt due between 2015 and 2029. A negative outcome to the auction will add to the Euro’s decline.
“The Euro’s main threat is the political one from Spain,” said the head of foreign-exchange research at Societe Generale SA. “Eyes are on the political scandal in Spain, but also looking forward to Spanish bond auctions tomorrow and Mario Draghi’s post-ECB meeting press conference.”
The Euro is set to come under further pressure when EU leaders meet for a two-day summit to address the issue of the EU budget. A meeting last November ended inconclusively. France has come forward declaring its opposition to any budget cuts whilst the Germans and British are firmly in favour of cuts.
British Prime Minister David Cameron’s spokesman said: “The position is very much that of November where we were working with countries such as Sweden, the Netherlands, Denmark and Germany because we all agree that spending needs to be reduced further. I would describe it as very much a continuation of the close working we had at the November European council. In terms of reaching agreement – these negotiations have always been difficult. I don’t see these as being any different. They can often take quite considerable time. You sometimes need several goes at it.”
If no firm decision is mad then the Euro could weaken further.
These exchange rates were correct as of 10:30 am
The Pound to Euro exchange rate is currently trading at 1.1571
The Pound to US Dollar exchange rate is currently trading at 1.5657
The Pound to Australian Dollar exchange rate is currently trading at 1.5184
The Euro to US Dollar exchange rate is currently trading at 1.3529
The Euro to Pound exchange rate is currently trading at 0.8641
The Euro to Australian Dollar exchange rate is currently trading at 1.3123
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