Euro Drops after Greek and French Elections

By TraderVox.com

Tradervox (Dublin) – Greek and French elections have put great pressure on the euro and other high yielding currencies as concerns about the region’s ability to deal with sovereign debt crisis increased. The euro dropped to a 3-month low after Francois Hollande won the French election against the incumbent Nicolas Sarkozy who got 48 percent of the vote against 52 percent for the Socialist party leader Hollande. In Greece, voters are supporting anti-bailout and anti-austerity parties as the preliminary election was held on Sunday. These results have increased concerns that austerity programs in the 17-nation trading bloc will be derailed.

The euro declined for the sixth day today, making it the longest decline period since September last year. This has come at a time when elections in the region are showing continued resentment of the austerity efforts. The German Chancellor’s party registered the worst election result in Schleswig-Holstein state in more than half a century compounding the problems raised by the Greek and French elections. In the meanwhile, the yen and the greenback rose, as the market sought for safe haven.

According to some market analysts, traders are showing their concerns about the euro as voters in Greece and France are showing their dissatisfaction with the austerity measures. Results from France and Greece are indications that the debt crisis in Europe might prevail for a longer period as new negotiations are expected to be started. The debt crisis in Europe has driven several economies in the region back into recession including Spain and Netherlands. The austerity measures taken by the region were meant to deal with the debt crisis in the region but this has now gotten a blow as major supporters of the program have been defeated in their domestic political elections.

The euro declined against the US dollar to trade at $1.2986, after it had earlier declined to $1.2955, which the weakest since January 25. The 17-nation currency dropped 0.9 percent against the yen to trade at 103.59 yen.

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