Risk appetite has left currency market, and the result is a struggling euro right now. There has been some good news out of the eurozone, with Ireland and Spain exiting their bailouts, but there are still plenty of troubles and the European economic recovery may be far from certain.
Borrowing costs in countries hit hardest during the sovereign debt crisis in the eurozone are down. Costs in Italy, Portugal, Spain, and Greece fell in January, prompting optimism that economic recovery is on the way. Ireland and Spain are exiting their bailouts, and it appears that things are slowly picking up with the eurozone economy.
However, even though investors and others thing the worst is over, the ECB remains ready to ease further if need be, and an interest rate hike isn’t expected any time soon. Additionally, there are still problems with liquidity, with many small businesses unable to secure funding from banks.
With these problems still facing the eurozone, and with risk appetite gone today as stock markets around the world lose ground, it is little surprise that the euro is struggling.
At 14:43 GMT EUR/USD is down to 1.3688 from the open at 1.3698. EUR/GBP is a little higher, up to 0.8288 from the open at 0.8235. EUR/JPY is down to 139.9905 from the open at 141.3285.
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