The Euro falls on concern that the downturn maybe more severe than expected

The euro fell against the dollar after Moody’s Investors Service said it may downgrade a number of banks with units in Eastern Europe, adding to concern financial turmoil in the region is worsening. The euro also weakened for a second day against the yen on speculation its recent declines triggered the execution of automatic sell orders. “The financial turbulence in central and Eastern Europe is likely to persist,” said Masafumi Yamamoto, head of foreign- exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader. “The markets may perceive this as a factor to sell the euro.” The EUR/USD is currently trading at $1.2630 as of 8:30am, GMT.

The yen dropped to a five-week low against the dollar after Japan’s Finance Minister Shoichi Nakagawa said today he would resign after budget bills are passed in the nation’s parliament. The dollar climbed to 92.39 yen from 91.73 yen, after touching 92.75, the highest level since January the 8th. “Nakagawa’s resignation seems to be spurring concern over the world’s second-largest economy,” said Osamu Takashima, chief analyst for global market sales and trading at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest publicly listed lender. “The market is short the dollar and long the yen, so there’s a bias to buy back the U.S. currency and sell Japan’s.” The USD/UPY is currently trading at 92.10 as of 8:45am, GMT.

The Australian dollar slid as the central bank said record-low interest rates will take time to revive economic growth, giving policy makers more room to lower interest rates. The central bank reduced borrowing costs 1 percentage point in February and has lowered rates by 4 percentage points since early September. Traders are betting on a 57 percent chance of a 0.75 percentage point cut when the bank meets in March, up from a 16 percent possibility yesterday. The Australian dollar slid 26 percent against the greenback over the past six months as co

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