EU Summit Fails to Strengthen Euro

?The latest European Union summit meeting is unlikely to produce any major solutions as the failing euro
continues to cause financial mayhem in financial markets around the globe.

EU leaders are in Brussels this week to attend the latest European Union summit meeting where they will leaders will once again try to come up with a comprehensive plan to address the continent's ongoing debt problems and prevent the euro zone debt crisis from dragging down the whole world economy. Despite the optimistic goal and the recent EU agreement to spend an additional 120 billion euros ($149 billion) to stimulate growth and create new jobs in member nations, the shared euro currency is still losing value compared to the U.S. Dollar. Most financial analysts have noted that the EU leaders are more divided now than at any time since the euro crisis first began, and few observers expect that any new measures agreed on during the current two-day summit will have any significant effects on the region’s debt crisis.

As Germany's Chancellor Angela Merkel has continued to refuse to back other countries' debts, and the euro continued to lose value as it hit a three-week low against the Japanese yen, most currency speculators also feel the current summit meeting is unlikely to produce any major solutions. Instead, they point to more capital outflows from the euro nations to other European and non-European currencies.

Even though the 17-nation euro currency dropped 0.2 percent to $1.2444 USD, the dollar also lost some ground to the yen as Japan’s currency strengthened against a decline in stocks that had the effect of increasing the demand for safer investments. As U.S. jobless claims dropped by 6,000 to 386,000 in the week ending June 23, the dollar strengthened against 12 of the16 currencies it is traded against the most. At the same time, the euro fell 4 percent and the yen dropped by 3.2 percent. The biggest loser currency was Brazil’s real, dropping 10.2 percent, and the Mexican peso was the largest gaining currency posting a 2.4 percent rise. The dollar also gained slightly against the British pound, which dropped from $1.5563 to $1.5515.

In this climate of bad news for the euro, Europe's leaders at the summit in Brussels face renewed global pressures to try to contain the region's debt crisis. The overall impression is that even though the latest talks are trying to work out a plan for tighter European integration and head off a potentially catastrophic worldwide economic collapse, most economists warn that the recent problems in Spain and Italy have only increased the tensions and that any tangible results coming from the current summit meeting are unfortunately very likely to continue to cause financial mayhem in financial markets around the globe.