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FOREX-Euro down vs dlr on China GDP, higher Spanish yields
April 13, 2012 / 2:45 PM / 6 years ago

FOREX-Euro down vs dlr on China GDP, higher Spanish yields

* Euro dips, data shows Spanish banks’ reliance on ECB

* Still expected to hold within $1.30-$1.35 range

By Julie Haviv

NEW YORK, April 13 (Reuters) - The euro fell against the dollar for the first time in three days on Friday as a rise in Spain’s borrowing costs revived worries about the euro zone, and as disappointing Chinese data spurred global growth concerns.

The single currency, however, is not expected to break out of its recent range against the dollar despite the rise in Spanish bond yields and weaker-than-expected Chinese GDP data.

“Spain and China are by far the main market drivers today, but the euro remains in a consolidative mode and will likely stay range-bound for the time being,” said Mark McCormick, G-10 currency strategist at Brown Brothers Harriman in New York.

“The Asian markets kind of took the Chinese data in stride while Europe and the U.S. are viewing it much differently.”

Ten-year Spanish government bond yields came close to testing 2012 highs hit earlier in the week, fueling concerns the country could be the next source of contagion in the euro zone debt crisis as it struggles to grow its way out of debt.

Spain’s banks relied heavily on European Central Bank liquidity lines in March and borrowed a record 316.3 billion euros, almost double the amount borrowed in February.

The common currency was last down 0.7 percent on the day versus the dollar at $1.3084. That is on the lower end of the $1.30-$1.35 range it has traded in since January.

McCormick said the euro will likely remain within the confines of $1.30-$1.34.

“There is little impetus for the euro to break out of that range until we get a firmer grip on U.S. growth and the euro zone’s economy.”

The dollar was unchanged against the yen at 81.94.

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