Forex: Week’s review

On Monday euro retreated from highs against the dollar amid weak trading in the absence of any publication statisticsi because bank holidays in Europe and the United States.

Earlier, investor optimism was associated with the news that, according to opinion polls, the majority of the population of Greece supports the center-right party "New Democracy", which stands for the continuation of the country's obligations to international lenders and observance of austerity measures.

On Tuesday the euro fell to the lowest level since July 2010 against the dollar as investor concern about Spain’s ability to recapitalize troubled banks increased, boosting bets the union’s debt crisis is worsening.

The 17-nation currency dropped below $1.25 for the second time this month after Egan-Jones Ratings Co. reduced its credit rating for Spain to B from Bb-. The euro fell against most of its major counterparts as Spanish officials debated how to fund a recapitalization of the Bankia group.

The yen gained against the majority of its most-traded peers amid increased demand for haven assets.

On Wednesday the euro fell to the lowest level in almost two years against the dollar as Spain struggled to rescue its troubled banks, adding to signs the European debt crisis is spreading to the region’s larger economies. Spain’s 10-year bond yield rose as high as 6.70 percent, approaching the 7 percent level that led to bailouts in Greece, Ireland and Portugal, after central bank Governor Miguel Angel Fernandez Ordonez resigned a month early amid criticism over the nationalization of Bankia group.

On Thursday the yen gained to a more than 11-year high against the euro as investors sought the perceived safety of the nation’s debt amid a deepening European crisis and slowing U.S. growth. Japan’s currency strengthened against all its major counterparts for a second day as the premium investors receive for buying debt of the U.S., U.K. and Germany instead of Japanese securities fell.

The euro rose from the weakest in almost two years versus the dollar after Dow Jones reported the International Monetary Fund has started planning for a potential rescue of Spain. The European department of the IMF has begun contingency planning for a rescue loan to Spain, Dow Jones reported, citing anonymous sources.

On Friday the yen rose against most of its major counterparts after the U.S. added the least jobs in a year last month, adding to concern global growth is stagnating. Payrolls climbed by 69,000 last month, less than the most- pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated, the Labor Department reported. The median estimate called for a 150,000 May advance. The jobless rate rose to 8.2 percent from 8.1 percent, while hours worked declined.