Numbers Show Euro On Thin Ice
August 13, 2011 by UPI - United Press International, Inc.
FRANKFURT, Germany, Aug. 13 (UPI) — Slow economic growth in France and debt concerns throughout Europe are poised to undermine the euro’s value compared to the U.S. dollar, numbers show.
A measure that shows how slanted up or down options prices are, based on one-month 25 percent risk reversals, has hit record at 3.60 volatility points, The Wall Street Journal reported Saturday.
Long story short: the numbers indicate the euro is about to drop in value against the dollar after holding onto its relative strength for much of the year. One euro bought $1.42531 on Friday.
With the debt crisis in Europe making daily headlines, it follows that the euro would have spent most of the year in retreat against the U.S. dollar. But the United States has had budget problems of its own and a faltering economic recovery on top of that.
In addition, the U.S. Federal Reserve completed an asset purchasing program in June that had been holding the value of the dollar down. As that has ended, the euro is more apt to lose value without as much parallel movement in the greenback.