Uncertainty over Greek debt sees euro drop against the dollar

Weak business confidence data coming out of Germany and uncertainty over the economic situation in Greece saw the euro drop to its lowest level in two months. The euro is currently trading at $1.2702 after a fall to $1.2661.

The euro was prevented from dropping further by hints that international lenders may be about to send further aid to Athens. Wolfgang Schaeuble, Germany’s Finance Minister, said the government was considering allowing a single 44 billion euro payment to be transferred the stricken country.

However, before this can happen policymakers across Europe along with the International Monetary Fund will have to agree that Greece is doing enough to ensure a reduction over the long term of the country’s sovereign debt. A new deal is due to be discussed by Eurogroup on 20 November.

On Tuesday the euro hit its lowest level against the yen in a month before recovering slightly to 100.61 yen. The problems being experienced by the single currency also helped the dollar index to climb to its highest level for two months to hit 81.241.

Concerns that Congress will not be able to come to an agreement before the end of 2012 have fanned fears that the US economy could slip back into recession. Possible tax increases and budget cuts have supported the greenback which is seen as a safe haven for investors.