The euro tumbled to a fresh two-year low against the dollar
Friday, dragged down by negative developments in Spain and Greece.
The euro fell to $1.2144, its lowest level since June 2010,
and hit multiyear lows against the Australian dollar, yen and other
currencies. It recently changed hands at $1.2158, down 1% from $1.2280
late Thursday, according to EBS via CQG.
The selloff deepened after the Spanish regional government in
Valencia requested government aid to help refinance its debt. Spanish
10-year bond yields above 7% for the first time in more than a week, a
level generally considered unsustainable in the long term.
Also weighing on markets, the European Central Bank said
Friday that it would stop accepting Greek bonds as collateral for the
time being.
The euro also dropped to new multiyear lows against the
Australian dollar and the yen. The common currency fell to Y95.42, its
lowest level since November 2001, recently hovering around Y95.53 from
Y96.51 late Thursday.
Against the Aussie, the common currency touched a euro-era
record low of A$1.1704. It was recently trading at A$1.1709 from
A$1.1779 late Thursday.
Earlier this week, the market was largely focused on the
Federal Reserve and U.S. economic data for any signals of additional Fed
stimulus, giving the euro a reprieve as it wavered in a tight trading
range against the dollar.
"I think for a lot of this week the focus was off the euro, so
the euro got a breather," said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington. "Today we're seeing an
unwinding of that move. A lot of that was triggered by Spain this
morning."
The dollar was stronger across the board as investors fled to
currencies perceived as safer. The WSJ Dollar Index, which measures the
dollar against a basket of currencies, was recently at 72.34, up from
71.88 late Thursday.