Euro Exchange Rate News Index

At present, the euro dollar exchange rate is 0.23 pct higher on a day-to-day basis at 1.2867, the euro pound exchange rate is 0.05 pct higher at 0.8468, the euro Australian dollar exchange rate is 0.3 pct lower at 1.3158.

[NB: The above quotes are taken from the interbank markets - your bank will affix a discretionary spread to the retail rate they offer. However, an independent provider will guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here.]

"The underlying debate on the possibility of a negative ECB deposit rate weighed on EUR-USD on Friday, with investors still seeing the April low at 1.2742 as the next target below 1.28. Again, this pair needs to reach at least 1.2880 to start stemming more aggressive sales," says a morning currency briefing from UniCredit Bank Research.

The USD remains strong against the other currency majors at the start of a week that will see Ben Bernanke’s testimony, the German Ifo survey and EU PMIs.

On the other hand, the boring agenda for today will likely keep activity dull and mostly chart-driven warn UniCredit.

Has the threat of a Eurozone break-up really decreased?

There is a sense that the threats facing the Eurozone have diminished.

This school of thought was given form by the chief executive of Goldman Sachs, Lloyd Blankfein who told newspaper Welt am Sonntag that he is confident the euro will survive despite the debt crisis, he said in an interview with .

According to one analyst Blankfein has fallen into the trap within which the underlying fundamental picture is obscured by elevated and favourable asset prices.


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Stephen Gallo at BMO Capital Markets warns that the long-term picture for the Eurozone remains uncertain. Indeed, this is the first time in a very long time, that EUR break-up risks are still rising:

"Blankfein’s comment, in my opinion, essentially stems from the conventional wisdom, which is that with bond yields falling and OMTs essentially “in place” EMU break-up risks are declining.

"My view is that this is the first time in a very long time, that EUR break-up risks are still rising despite the fact that break-up risk premia are not being factored “into the price” in any major way: be it the CDS market, the bond market, the EUR, or the share prices of European financial institutions.

"But market participants in particular have a habit of interpreting or, better yet, deriving “underlying” or “structural” judgements from asset prices themselves, just as we did when EUR/USD traded to $1.6000 during the last decade.  

"In this case, doing so also risks creating misunderstandings about how EMU should function (politically and monetarily, for instance), particularly when we talk about the increased chances of EMU survivability based on aggressive ECB easing or sharp spread compression: “if the ECB prints enough, the euro zone can survive” or, “if Spanish bond yields are low enough, break-up probabilities are essentially nil”.

"This is wrong and, quite dangerous for a whole host of important reasons in my view.  The more policy makers aggressively paper over the cracks in the short-run, the less likely EMU is to survive in the long-run.

"The fact of the matter and irony of the current situation is that narrower spreads and the presence of OMTs are keeping euro break-up risks low in the short-run, but in the long-run, delays to adjustment in the periphery, and in France and Italy, are actually increasing the chances of a euro break-up at the same time.

"Germany simply cannot survive inside of an economic union with countries that refuse to undergo a substantial adjustment – otherwise, the penchant for accumulating debt will forever be a recurring theme."