The euro has fallen below the important 1.30 level in this week’s headline-driven market on concerns European leaders aren’t doing enough to stem the sovereign debt and banking crisis.
The iPath EUR/USD Exchange Rate ETN (NYSEArca: ERO) and CurrencyShares Euro Trust (NYSEArca: FXE) traded lower Wednesday.
Investors are worried about rising government bond yields in Europe and potential funding problems at big banks. Also, Germany has been sending strong signals that it doesn’t want to participate in another European bailout.
The ETFs tracking the euro’s movements versus the U.S. dollar are approaching their 2011 lows. CurrencyShares Euro Trust is down nearly 5% over the past month.
Markets are skeptical that last week’s EU summit produced enough to solve the region’s financial problems.
On Tuesday, German Chancellor Angela Merkel voiced her intent to oppose increases in Europe’s lending facility beyond the $659.4 billion already in place, reports Javier E. David for The Wall Street Journal.
The ESM “currently stands at 500 billion euros, which is unlikely to be enough to cover Spain and Italy if they need to retreat from the bond markets,” Kathleen Brooks, research director at Forex.com, said in a MarketWatch article.
“The euro remains a sell,” Joe Manimbo, a market analyst at Travelex Global Business Payments, said in the Wall Street Journal article. Investors aren’t seeing “a willingness by the European Central Bank to ramp up government bond purchases. That would buy more time for officials, but we need some type of comprehensive solution that has been elusive to date,” Manimbo added.
CurrencyShares Euro Trust
For more information on European euro, visit our euro category.
Read the disclaimer; Tom Lydon is a board member of the funds for Rydex|SGI.
Max Chen contributed to this article.