The euro crumbled to new lows as concerns snowball over the eurozone’s deteriorating fiscal health and its negative effect on economic growth. Greece’s Prime Minister, Lucas Papademos, warned markets the Greek economy could collapse by as early as March this year. Renewed euro-selling took the single currency to September 2010 lows against sterling with the British pound further supported by upbeat data on UK construction sector activity. Flows in favour of the safe haven US dollar allowed the greenback to resume its uptrend back towards recent 15-month highs versus the euro.

Sterling

Sterling surged to September 2010 peaks versus the under pressure euro as market players begin to price in the real possibility of both Germany and France being dragged into the eurozone’s debt storm. The pound’s progress was also propped up by yet another upbeat report on UK economic activity.

US dollar

The US dollar’s trade weighted index, which tracks its strength against a basket of major rivals, surged by almost 1 per cent as sentiment turned sharply in favour of safe haven currencies. Events in Europe re-affirmed expectations the regions debt troubles are becoming a serious threat to economic stability. Mass euro-selling into the US dollar pushed the greenback back towards 15-month highs, breaking through key technical resistance levels with little trouble.

Euro

Greek Prime Minister, Lucas Papademos, warned markets that his struggle to enact budget reforms could lead to the country’s collapse by as early as March. Meanwhile, a German bond sale once again heightened worries demand for even the safest of eurozone sovereign debt is now at risk. Those concerns come just as France prepares to auction long-term debt. Weak demand could seriously jeopardise the perfect credit rating of the area’s second largest economy. The euro fell sharply as a result with very few traders now willing to place any positive bets on Europe’s beleaguered common currency.

Japanese yen

A holiday shortened week is keeping local events in Japan extremely quiet, leaving the yen to trade almost exclusively on broader market events. Fresh worries about European debt pulled the yen higher across the board, taking it to new 11-year highs against the euro.

Travelex Global Business Payments Malta. (Free phone: 800 733 22) www.travelex.com/mt/

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