Euro remains near one-week trough against dollar

The euro hovered close to a one-week low versus the dollar on Wednesday, held back by continued uncertainty over whether Spain will finally request financial aid.

The situation worsened in Spain on Tuesday as angry protesters took to the streets of Madrid to vent their dissatisfaction about further austerity measures which will be introduced in next year’s budget. The protests turned violent as police had to move in to halt proceedings.

The single currency dropped by around 0.1 per cent to $1.2897 after spiralling to its lowest mark since 13 September ($1.2886) the previous day. It fell further away from its four-month peak of $1.3173 which it scaled on 17 September on the EBS trading platform.

The uncertainty boosted the Japanese yen, which may also get a further lift later this week from the Japanese fund repatriation in the lead up to the country’s half-year book-closing. But some market players claimed that businesses already had their needs covered so such flows are not expected to be significant.

Some investors, however, said that the Japanese currency continued to have an advantage against other major currencies. Credit Agricole’s director of foreign exchange Yujo Saito said that selling and buying forces lack strong momentum although the market remains bias towards selling because the euro is restricted by the region’s problems and the dollar is top-heavy versus the yen.