Euro Strain Impacts US Markets

However, Europe’s battle against economic turmoil is being echoed around the world, so determining the role of the Euro in the current situation would be no easy task. Analysts point out that the bond between European countries transcends that of a common currency, as borders have essentially been eliminated, allowing trade and travel to take place unhindered in so-called eurozone countries. Such high stakes are a great incentive to nations for ensuring that the euro does not fail.

Some of the problems envisaged by analysts include the fact that, although the sixteen Eurozone member countries – Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain – may agree that a common currency has economic and trade benefits, each country has its own policies, as well as unique problems and circumstances which affect inflation, interest rates and other economic indicators. By mid-May the Euro was considered to be the worst-performing major currency since the start of 2010. There has even been speculation that countries like Greece, Spain and Portugal may ditch the euro in favor of their former currencies – the drachma, peseta and escudo.

Certainly, last week was a tough one for Wall Street investors as the euro dropped to a four year low and Hungary was added to a growing list of economies in distress indicating that the problems in the region go beyond the strained euro, while on the home-front the US jobs report delivered weaker than expected results. As investors face a new week, there are few market-moving reports due, but the euro situation is likely to keep everyone on high alert.