May 25th, 2012

Euro Futures – The euro fell against the dollar and yen for the fourth day amid concern Spain’s regional governments may lose access to capital markets.

The shared currency erased earlier gains after Catalan President Artur Mas repeated his call for Spanish central government to help regions access funding at briefing with reporters today in Madrid. The euro traded at almost its lowest level since July 2010 after a Greek opinion poll showed an anti- bailout party gaining support before June 17 elections.

“What is sparking this selloff in the euro is Catalonia, one of the larger regions of Spain, now saying they need the government to help them get out of debt-financing problems,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York in a Bloomberg Radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “This is coming as a new shock to the market.”

The euro depreciated 0.2 percent to $1.2512 at 9:11 a.m. New York time. It fell to $1.2516 yesterday, the least since July 6, 2010. It was 0.2 percent weaker at 99.53 yen. The yen was little changed at 79.57 per dollar.

Spain’s government is analyzing “with all caution” requests from regional governments to help them regain access to capital markets, Deputy Prime Minister Soraya Saenz de Santamaria said.

“Catalonia headlines don’t tell us anything we didn’t know — autonomous region finances are awful — but the foreign- exchange market’s euro short-covering efforts this morning were immediately reversed,” said Kit Juckes, head of foreign- exchange research in London for Societe Generale SA. “The bears continue to look like they’re holding all the cards here, and $1.25 is still the key that unlocks the next leg down.”

- Allison Bennett in New York at Bloomberg.