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Canadian Mortgage Broker News - Euro hits four-year low

Canadian Mortgage Broker News - Euro hits four-year low

Euro hits four-year low

| Monday, 17 May 2010

Although European stock markets rebounded after last weeks declines, the euro continues to hover near four-year lows against the dollar.

Attention is still centred on the European debt crisis as investors worry that efforts to cut deficits and debt will destroy all growth by withdrawing government stimulus from economies in Greece, Spain and Portugal. These are key export for countries whose finances are more affluent such as France and Germany.

After last week's 750-billion rescue package, European Central Bank president Jean-Claude Trichet told a German newspaper that Europe's economy "is in its most difficult situation since World War II or perhaps even since World War I."

Stocks proved to be resilient though, amid worries that weighed on expectations before the open in Europe, as foreign exchange markets sold off the Euro.

"Before the financial markets opened, we were quite worried that they would drop in Europe....we now see that this tendency is not as harsh as we expected it to be," said Alain Crouzat, head of Paris-based asset management firm Montsegur Finance.

The euro has been the biggest casualty from the debt crisis which was down 0.4 per cent on the day at $1.2306, up earlier from the four year low of $1.2237.

Analysts think the euro will remain under pressure until the markets see rational budgetary actions in place for all indebted countries.

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