Euro weakens against greenback

The euro weakened against the US dollar yesterday by 0.29 cents (0.21%), closing the day at $1.3984.

• In early trading yesterday the euro weakened by over a cent against the dollar, following news that German regulator BaFin had warned that toxic debt of the country’s banks would blow up “like a grenade” unless they took advantage of government bad-bank plans to prepare for the next phase of the crisis.
  
• However, the euro clawed back some of its earlier losses yesterday afternoon following the release of better-than-expected US consumer confidence data yesterday afternoon. The Conference Board consumer confidence index rose to 54.9 in May from an upwardly revised 40.8 in April. This was much stronger than the 42.0 analysts had been forecasting. Nevertheless, the single currency still finished the day slightly down against the dollar.
  
• In trading so far today the euro has resumed its slide against the greenback, as investors continue to speculate over how far off an economic recovery the eurozone may be following yesterday’s report questioning the health of the German banking system.
  
• There are no major announcements due in the eurozone today, whilst in the US Existing Home Sales data is out at 15.00 BST.