Euro takes a beating, partly in fear of Ireland’s Nice vote
Meanwhile, the dollar rose on Wall Street's bright prospects..
German Finance Minister Hans Eichel went on the defensive on Thursday, denying reports of a 14 billion hole in Germany's 2002 budget. He termed the reports "wild speculation".
This came after comments on Wednesday in which he said Germany would be unable to keep its budget deficit below the EU's three percent of gross domestic product limit in 2002.
Soaring US stock futures on the back of a rosy assessment by computer giant IBM boosted the dollar against the euro. The euro was mired near earlier three-week lows against the greenback and 10-day lows versus the yen.
"On top of that, the real driving force today has been the negative news coming from Germany," said Ian Stanard, foreign exchange strategist at BNP Paribas.
"All in all, the sentiment toward the euro today is looking very negative and we expect this move to continue to unfold."
By 12.05pm the euro was trading down about two-thirds of a percent against the yen, having dropped as low as 121.00 yen, its lowest level since October 7.
The euro dipped as low as $0.9744, its lowest since September 27. It was trading down almost half a percent on the day. A move below $0.9725 would send it to a new one-month low.
The dollar was a touch softer on the day at 124.28 yen, over half a yen below four-month highs above 125, which were hit on Wednesday -- the middle mark between this year's high above 135 and low around 115 yen and seen as a profit-taking target.
Adding to the weak picture for the euro were the collapse of the Dutch government on Wednesday and Ireland's weekend referendum which could trip up the European Union's bold expansion plans if it goes the wrong way.
European Commission President Romano Prodi was quoted as saying a "No" vote in Ireland's referendum this weekend -- on the EU Nice treaty paving the way for expansion -- would be a ‘cataclysm’.
He was also quoted as saying the EU Stability and Growth Pact was "stupid". The EU Commission afterwards said Prodi was calling for flexibility in implementing the pact, and that rigid, dogmatic implementation would be stupid.
The European Central Bank, in its October report, stuck to its wait-and-see stance on interest rates.
