The Euro weakened to its lowest level in 16 months against the U.S. Dollar and fell for the first time in days versus the Yen on the possibility that France’s credit rating may yet be downgraded –a factor that could worsen the region’s debt crisis. The 17-nation currency slipped against the majority of its online Forex peers even after the French Finance Minister, Francois Baroin, commented that he had not received any notification of a downgrade. The shared currency continued on a downward trend as members of Parliament objected to a German fiscal treaty as it bypasses specific E.U. checks and balances. If this wasn’t enough to keep the value of the shared currency down, Fitch Ratings issued a strong warning to the ECB suggesting that it increase its bond purchasing program in order to prevent the demise of the currency.
Meanwhile, the U.S. Federal Reserve declared that the Beige Book survey showed that the U.S. economy expanded across the nation, although employment only improved slightly and housing figures remained stagnant. The U.S. currency rose against the majority of its Forex trade counterparts as market investors sought refuge from turmoil.
Other FX trading reports revealed that the British Pound declined versus the U.S. monetary unit following a release indicating that the country’s trade deficit had increased more than anticipated. Other metrics showed that U.K. retail store inflation declined to the lowest level in 16 months, which in turn spurred speculation that the Bank of England may have to implement further stimuli in order to boost economic growth.