Concerns over Europe are back. Recent parliamentary elections in Greece and presidential elections in France have opened another round of talks over the European currency’s future. Mr. Hollande unlike his predecessor shares no optimism with regard to harsh fiscal tightening, proposed by Germany, which casts doubt over the euro zone’s chances of recovery.
Asian markets were first to react to news from Europe. Nikkei index fell -2.8%, followed by Hong Kong Hang Sang -2.67% and S&P/ASX 200 -2.15% respectively.
EUR/USD Currency pair started trading with a 54 point gap at 1.3028 and went below the psychological level of 1.30 to 1.2955.
Also in the news, Wall Street Journal reports on the European debt crisis: “At the end of March, 10 of Europe’s biggest banks had parked a total of nearly $1.2 trillion of cash at central banks around the world, according to an analysis by The Wall Street Journal of bank disclosures. The total is $128 billion higher, or a 12% jump, since December and up 66% from the end of 2010”.
Given the current events, further weakening of Euro in the near term seems the most anticipated scenario.