Tradervox (Dublin) – The euro has been on the decline for most of the month and it is poised for the biggest monthly drop since September 2011 as Italian auction nears. Data released this week has shown that the prolonged decline of the euro has slowed the economy in the region. Concerns over Italy, Spain and Greece continue to plague the region which has been detrimental to the region and to the world’s economy as well. This was confirmed by the G8 leaders who were concerned about the effects of the prolonged debt crisis in the region which might lead the world’s economy into a recession.
The 17-nation currency dropped 0.2 percent against the dollar, which is the least it has been since July 2010, as yield premiums on Spanish bonds over Germany’s increased the highest in 17 years. The currency seems to be breaking many records, all in the negative and this cannot be good for the region’s economy. The concerns over the euro crisis have also led to the decline in the south pacific currencies which slid against the majority of the most traded peers amid concerns that the crisis has escalated.
According to Imre Speizer who is a strategist in Auckland at Westpac banking Corp, the euro zone economy has shown signs of deteriorating and as much as the euro might bounce back, it will be hard to hold for more than just a few days. Analysts have indicated that the euro may show some more weakness during the month of June.
Italy is expected to sell 3.5 billion Euros of five-year securities and 2.75 billion Euros of ten-year bonds. Investors will keep a close eye on this one as they try to size up investor confidence in the region’s economy. It is also important to keep in mind that the consumer confidence for the region was at negative 19.3 in May which is a slight improvement to the negative 19.9 for April.
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