The Euro declines slightly against the Dollar as fears continue on the bankings

The euro fell against the dollar after Britain’s Telegraph newspaper cited a German banking regulator saying debt at the nation’s biggest lenders may increase. The yen gained against all 16 of the major currencies and the dollar strengthened after News reported North Korea test-fired two short-range missiles, a day after conducting an underground nuclear test. The 16-nation euro also weakened versus the yen after Moody’s Investors Service placed its rating outlooks for Bulgaria’s DSK Bank AD and First Investment Bank Ltd. on review for possible downgrade. Moody’s cited “the likely deterioration of the Bulgarian operating environment,” as the reason for its decision. DSK Bank is rated D+ and First Investment is ranked D. The EUR/USD is currently trading at $1.3950 as of 8:50am, London Time.

Sterling fell on Friday, driven by losses versus the euro, Sterling fell against a stronger euro, which hit high’s against a broadly suffering dollar a day after an outlook downgrade of the UK by ratings agency S&P raised concerns about similar action against the United States. The pound showed little initial reaction to figures showing that the UK economy contracted 1.9 percent on the quarter and 4.1 percent on the year in January-March, unchanged from a first reading. The UK currency has largely recovered after tumbling on Thursday, when S&P surprised markets by cutting its outlook on the UK to "negative" from "stable," and saying that government debt could near 100 percent of gross domestic product. The GBP/USD is currently trading at $1.5850 as of 8:55am, London Time.

Canada’s dollar weakened from the highest level in more than seven months as crude oil dropped and investors speculated that recent gains may be excessive. “Oil is taking a hit and this may be a contributing factor today” in the Canadian dollar’s weakness, said Sacha Tihanyi, a currency strategist in Toronto at Scotia Capital, a unit of Canada’s third-largest bank. “A breather does look somewhat overdue.” Canada’s dollar, known as the loonie for the aquatic bird on the one-dollar coin, has gained 16 percent since reaching a four-year low on March 9 as investors stepped out of havens into higher-yielding assets such as stocks amid signs the global economic slump is moderating. Canada’s government will lower its 2009 economic growth forecast, Finance Minister Jim Flaherty told reporters today in Chelsea, Quebec near Ottawa. Flaherty said the federal deficit will be “substantially” greater and the economy will shrink more than he originally forecast in January. The USD/CAD is currently trading at 1.1302 as of 9:09am, London Time.

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