Euro down against the dollar

Concerns over the health of the global economy and a decision by Moody’s to downgrade the credit rating in five regions across Spain has seen the euro and the yen drop against the US dollar. The current fears about global growth have been fuelled by reports of poor earnings from companies in the US.

Spain’s borrowing costs rose after the Moody’s downgrade and the markets are waiting for Madrid to request a sovereign bailout. There are also concerns about the eurozone’s second strongest economy France after the release of figures that show the country’s manufacturing sector has dropped to its lowest level in more than two years.

The euro was trading at its lowest since 16 October at $1.2950. However, it has been kept up by expectations that Spain will imminently request a bailout which will mean the European Central Bank can begin to purchase bonds and drive the recession ravaged country’s borrowing costs down.

The dollar index settled at 79.923, the highest it has been in two weeks. The greenback has been helped by traders dumping riskier assets and indications that the country’s economy is getting back on track at a faster pace than many others.

The yen has dropped to its lowest in three months against the greenback and to a five month low against the euro as expectations are that the Bank of Japan will introduce a policy of monetary easing following a meeting at the end of the month.