Euro Continues To Fall As Budget Issues Arise
The euro looked likely to finish the week on a low note, trading at $1.2787 at 7:00 GMT.
The common currency has been under pressure as the eurozone looks likely to slip back into a period of recession despite policymakers’ best efforts to stave off another financial crisis.
On top of a string of disappointing economic data, the bloc is suffering from a lack of confidence as both France and Italy face major budget issues and Greece could be headed for a period of political instability.
Reuters reported that government bonds, especially those in struggling southern nations, saw a sell off on Thursday that drove yields higher. Many are worried that the European Central Bank will not be able to pull the region out of its growing financial plight as the situation began to look more and more dire.
Greek officials suggested that the nation may exit its bailout program in order to avoid the strict austerity cuts demanded as collateral by the EU and the IMF.
Greece has been forced to trim its bloated public sector in order to receive EU funding, something that has been widely unpopular among Greeks. The ECB countered, saying that there was some room for negotiation of Greece’s bailout terms, and that the bank would be willing to soften some of the spending cut mandates if need be.
Meanwhile, the EU will have to decide whether or not to reject 2015 budget proposals from France and Italy, both of which fail to meet previously agreed to deficit targets.
While northern nations like Germany are calling for the nations to be held accountable to EU standards, French and Italian policymakers argue that with business activity already on the decline, more spending cuts will only further aggregate the lack of economic growth.
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