The euro was mixed on Monday, as Portuguese borrowing costs soared to fresh record highs, fueling concerns about the region’s sovereign debt crisis.
European Union officials agreed on a permanent bailout fund at a meeting in Brussels last week, but no concrete steps were taken to bail out Portugal, even after the resignation of prime minister Jose Socrates make a rescue all but inevitable.
The return on Portuguese 10-year bonds reached more than 8.07 percent, the highest level in history for a Eurozone country. This came after S&P downgraded the five major Portuguese banks.
Still, the euro remained relatively resilient, helped by speculation that the European Central Bank will hike interest rates next week.
Also, the Wall Street Journal reported that the ECB is working out a plan to backstop struggling Irish banks with a new facility to replace the short-term Emergency Liquidity Assistance with medium-term funding.
The euro dropped to $1.4020 versus the dollar last night, and held near that mark after the release of U.S. personal spending figures.
A slower than expected rate of income growth did not deter spending, with personal spending rising by 0.7 percent in February after edging up by 0.3 percent in the previous month.
At 10.00 a.m. ET, the National Association of Realtors will release its data on U.S. pending home sales for the month of February. Economists predict that the index might have increased by 0.3 percent during the month.
The euro leveled off after hitting a 4-month low of GBP 0.8818 against the sterling.
There was little movement against the yen, with the euro holding just below Y115. The yen spiked higher against major rivals earlier this month, but was weakened by a rare intervention from the Group of Seven.
The euro was also stable versus the Swiss franc, staying near CHF 1.2925. The euro started the year at a record low of CHF 1.24.