Euro Falls Steeply Against Dollar on Bank Writedowns

Yesterday was the start of a fresh quarter, and it was the Euro’s turn to have its sentiment undermined, at least against the dollar. After failing to test its record high on Monday, the Euro has fallen steeply against the US dollar on renewed concerns about the European banking system as Swiss bank UBS (UBS) announced another $19 billion in write-downs on illiquid US mortgage-backed assets and Deutsche Bank (DB) suffered big write-downs too. Tuesday saw disappointing Eurozone data such as German retail sales which fell 1.6% in February vs expectations of small 0.6% gain; Eurozone manufacturing PMI for March fell to a six-month low.

US Manufacturing

The March ISM manufacturing index came in at 48.6, better than expectations of 47.5 and rising slightly from February’s reading. It still indicated a contraction in manufacturing activity.

Bernanke Speaks

Traders and investors will next focus on Fed chairman Bernanke’s testimony later Wednesday to a Congressional committee in the US. Bernanke is likely to continue to talk about the downside risks to economic growth, and leave the door open to future rate cuts.

Comments

[VennData]

Interesting how the Euro's the currency of concern while the company is Swiss. I think that The whole secretive banking thing may be bad for the Swissy in the short near term as well. Will the beneficiary be the Sing. Dollar as their secret banking rules are a decade or so away from being brought to heel.