Currency markets took a break and the euro was traded with slight change on Wednesday, as participants did not receive fresh news about Spain and Greece and ignored warnings from the IMF about the enormous risks that the European politicians would fail to act decisively to rescue the Eurozone from crisis.
The euro was traded in a narrow range against the dollar during the European session, depreciating by about 1% according to the trading on Tuesday, as Spain continues to delay its application for salvation, and the scarcity of money in Greece becomes more real. Jane Foley, senior currency strategist at Rabobank in London says that the currency markets sit and wait for Spain and follow the news from Greece.
The Spanish Finance Minister Luis de Gindos said on Tuesday that he considers the wider implications of the salvation application, although the decision will be based on what is good for the economy.
On this situation, foreign exchange traders refrain from making important decisions about opening new positions and ignore the clear warning from the IMF that the inaction of politicians in the Eurozone, pushes the financial system dangerously close to falling and may have potential cost of the crisis for several hundred billion dollars.
Foley added that the politicians from the Eurozone should act decisively.
Elsewhere in Europe, the Swedish krona raised against the euro after the preliminary data showed that industrial production increased by 3.2 percent in August according to the previous year.