The European Union is struggling to contain the negative sentiment leaking from the overleveraged balance sheets of countries like Greece, Spain and Portugal. But efforts like the $1 trillion bailout have failed to quell investor fear.
According the Economist, the S&P 500 is about even year-to-date while the MSCI Europe is down about 18%, thanks to the decline in the value of the euro compared to the dollar.
Despite the rapid decline in the euro, Eurogroup chairman Jean-Claude Juncker thinks the drop-off is “largely due to irrational approaches of the financial markets,” reports Deborah Levine for MarketWatch. As such, Juncker doesn’t think steps need to be taken to defend the euro. [Which ETFs Have Euro Exposure?]
Marc Chandler, a currency strategist at Brown Brothers Harriman doesn’t agree. He points out that many investors believe the European Union will need some sort of debt restructuring, while others think the crisis will call into question the existence of the monetary union. [Euro ETFs: Are They Out of the Woods?]
The euro is down about 7% this month, hitting a four-year low against the U.S. dollar earlier in the week.
For more stories on the euro, visit our euro category.
- WisdomTree Dreyfus Euro (NYSEArca: EU)
- CurrencyShares Euro Trust (NYSEArca: FXE)
Sumin Kim contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.