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Euro Continues to Slide As Debt Concerns Weigh

Last updated 1/4/2012 10:37 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Risk FX continued to slide in early North American session today as profit taking and renewed concerns over European sovereign debt issues weighed sentiment. US equities  were lower by more than 40 points in the first hour of trade as markets reacted to a lackluster auction of German 10 year bonds. Earlier Germany was able to auction off only 4 out of 5 Billion Euro offering at bid to cover ratio of 1.3 and a yield of 1.94%.

Although today’s auction was an improvement over the prior month’s refinancing activity, it nevertheless highlighted the sense of caution that permeates the European sovereign debt markets   as the region faces a massive wave of refinancing over the next few months amidst continuing turmoil in its peripheral economies.

The EUR/USD slipped to  low of 1.2910 in morning North American trade and remains under pressure as it underperforms the other major currencies. With US economic calendar barren for the rest of the day after Factory Orders printed slightly below expectation, trading may remain choppy for the rest of the day with risk off sentiment likely dominating flows. If risk aversion accelerates as the day progresses the pair could test the lows near 1.2800 set in holiday thin trading last week.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.