Spain budget announcement sees euro stay above two-week low

The euro was able to hold above its two-week low versus the dollar after Spain announced a fresh budget which many market players saw as the first step towards requesting financial aid.

With the third quarter coming to an imminent end, the euro is on course to close it out with a marginal gain, but the quarter ahead is likely to see the currency remain pressurised, with many obstacles in front of it, with the financial crisis in Spain and Greece a major cause of concern.

Minori Uchida of the Bank of Tokyo-Mitsubishi said that he anticipates the currency will fall slowly in the weeks ahead. He noted the possibility of Spain having its credit downgraded, the chance that discussions between Greece and the troika may come to nothing and that the eurozone economy is set to remain fragile.

The single currency was last seen at $1.2929, a slight increase from close of trade in the US on Thursday and well above a two-week low hit earlier on Thursday of $1.2828. The euro has now gone up by 2.1 per cent since the beginning of the quarter, largely on hopes that will finally request a financial bailout, a factor which would see the troubled country have its borrowing costs reduced and kick-start the European Central Bank’s bond-buying programme.