The Euro remained steady during the Asian session on Wednesday while hovering near 2-year lows against the US Dollar, with analysts sweating over the outcome of a German court hearing on the Euro Zone bailout fund.
This hearing is yet another hurdle obstructing efforts to launch the region out of its crippling debt crisis.
Most analysts believe that while the Euro could see some short-term corrective moves, it is difficult to foresee too many market players taking long positions in the following months.
Earlier today the market remained unconvinced that the Euro zone can decisively bring down its struggling member states' borrowing costs.
The Euro zone's debt crisis has now also engulfed the region's larger economies of Spain and Italy. Yesterday Italy announced that it may need Euro zone aid to ease its borrowing costs as market jitters persisted.
Spain is set to receive the first batch of aid for its troubled banks by the end of July. Euro finance ministers have given Spanish Prime Minister, Mariano Rajoy's government an extra year, until 2014, to drive the nation's budget deficit below the Euro limit of 3% of gross domestic product.
Concerns about a protracted struggle to resolve the debt crisis persisted on plans for a hearing, by the German Constitutional Court, into whether the Euro zone's bailout fund, known as the European Stability Mechanism (ESM), and planned changes to the region's budget rules are compatible with German law.
The ESM is seen by many economists as a vital tool to assist in reducing the borrowing costs of indebted nations and for breaking the link between the sovereign debt problem and the banking sector stress in Europe.
Scepticism about the decision- making process in Europe has hurt Euro sentiment, and earlier today the Euro traded at $1.2256, near a two-year low of $1.2225 touched on Monday.
Investors are currently risk averse and are seeking refuge in safer assets such as bonds that are issued by sturdier Euro zone economies, like the Netherlands and France and Japanese government bonds (JGB). The JGB appear more valuable relative to U.S. Treasuries or German Bunds, given Japan's low inflation rate.
The Yen has remained stronger against the Dollar after a three day gain, on signs that Europe's debt crisis is hurting growth and on expectations that Japan's central bank will refrain from adding stimulus to temper the currency's appreciation.
The Yen touched a one month high against the Euro at 97.10 Yen and the Yen earlier fetched 79.35 per Dollar.
Demand for the U.S. Dollar has remained limited ahead of the Federal Reserve releasing minutes of its June 20th gathering. At that meeting Fed Chairman Ben S. Bernanke had indicated another round of QE remains an option.
The Fed had sought to cap borrowing costs and stimulate the economy when it bought $2.3 trillion of bonds in two rounds of so called quantitative easing, or QE, from December 2008 to June 2011.
China is due to release its second quarter gross domestic product report on Friday. This is expected to show the slowest growth in at least three years, and follows benign inflation figures and weak imports which have clouded the prospects for Chinese exports.
This hearing is yet another hurdle obstructing efforts to launch the region out of its crippling debt crisis.
Most analysts believe that while the Euro could see some short-term corrective moves, it is difficult to foresee too many market players taking long positions in the following months.
Earlier today the market remained unconvinced that the Euro zone can decisively bring down its struggling member states' borrowing costs.
The Euro zone's debt crisis has now also engulfed the region's larger economies of Spain and Italy. Yesterday Italy announced that it may need Euro zone aid to ease its borrowing costs as market jitters persisted.
Spain is set to receive the first batch of aid for its troubled banks by the end of July. Euro finance ministers have given Spanish Prime Minister, Mariano Rajoy's government an extra year, until 2014, to drive the nation's budget deficit below the Euro limit of 3% of gross domestic product.
Concerns about a protracted struggle to resolve the debt crisis persisted on plans for a hearing, by the German Constitutional Court, into whether the Euro zone's bailout fund, known as the European Stability Mechanism (ESM), and planned changes to the region's budget rules are compatible with German law.
The ESM is seen by many economists as a vital tool to assist in reducing the borrowing costs of indebted nations and for breaking the link between the sovereign debt problem and the banking sector stress in Europe.
Scepticism about the decision- making process in Europe has hurt Euro sentiment, and earlier today the Euro traded at $1.2256, near a two-year low of $1.2225 touched on Monday.
Investors are currently risk averse and are seeking refuge in safer assets such as bonds that are issued by sturdier Euro zone economies, like the Netherlands and France and Japanese government bonds (JGB). The JGB appear more valuable relative to U.S. Treasuries or German Bunds, given Japan's low inflation rate.
The Yen has remained stronger against the Dollar after a three day gain, on signs that Europe's debt crisis is hurting growth and on expectations that Japan's central bank will refrain from adding stimulus to temper the currency's appreciation.
The Yen touched a one month high against the Euro at 97.10 Yen and the Yen earlier fetched 79.35 per Dollar.
Demand for the U.S. Dollar has remained limited ahead of the Federal Reserve releasing minutes of its June 20th gathering. At that meeting Fed Chairman Ben S. Bernanke had indicated another round of QE remains an option.
The Fed had sought to cap borrowing costs and stimulate the economy when it bought $2.3 trillion of bonds in two rounds of so called quantitative easing, or QE, from December 2008 to June 2011.
China is due to release its second quarter gross domestic product report on Friday. This is expected to show the slowest growth in at least three years, and follows benign inflation figures and weak imports which have clouded the prospects for Chinese exports.
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