The Euro struck a 3½ month low against the U.S. Dollar in Asian trade as news of $2 billion over the past six weeks in trading losses by JP Morgan caused some market jitters and risk aversion. According to the report, a failed hedging strategy caused the loss of $2 billion and some analysts believe that that will wind up not being an isolated incident and may compel other investment banking firms to acknowledge their own losses.
The Euro is also vulnerable to the events in Greece, specifically a political deadlock of the anti-bailout parties against the pro-bailout contingent, which may result in a second election and could spell not just a bankruptcy, but the withdrawal of Greece from the Eurozone. One meeting between the party members set for later today is seen as a final attempt to form a coalition government so that a re-run of the election can be avoided.
As reported at 1:16 p.m. (JST) in Tokyo, the Euro-Dollar was earlier trading at $1.2905 on the EBS trading platform, but recovered slightly more recently to trade at $1.2926, still a loss of 0.1% on the day. Analysts point out that an options barrier near $1.2900, if broken, could add to the Euro’s decline. The safe haven Japanese Yen also moved higher against the common currency, trading at 103.27 Yen.