Austrian Banking Sends Shockwaves Through the Euro Zone

Spread betting and contracts for differences on the spot forex market should consider that the euro is faltering right now. News out of the euro zone is showing that Austrian banks are deteriorating, and that is causing some uncertainty.

So far, Carinthian Hypo Alpe Adria Bank AG has been nationalized, and speculation swirls about the fate of Oesterreichische Volksbanken AG. With concerns about Austrian banking as the next focus of the credit crisis, it is little surprise that the euro is heading lower today. GFT's Boris Schlossberg reports in FX360 on the euro in forex trading:

The euro tumbled below the 1.4600 level for the first time since October 5th as the single currency suddenly became a toxic asset of its own, with traders loathe to buy it until further clarity in Austrian banking sector can be established. The unit has now come off more than 500 points from its yearly highs as concerns over the fiscal integrity of the European financial sector along with better than expected US economic data have markedly changed the dynamic in the FX market in favor of the dollar.

It is clear that the dollar remains the most stable currency in the world, especially with the U.S. economy stabilising, and that the recent favour the euro has been receiving is quickly evaporating.