Euro Slips On Uncertainty, Even After Mubarak Exit NEW YORK (Dow Jones)--The euro slipped against the dollar Friday, as initial relief over Egyptian President Hosni Mubarak's resignation gave way to further questions about potential ripple effects in the Middle East and a renewed focus on the euro-zone's sovereign debt woes.
The dollar was broadly buoyed by encouraging U.S. data and some safe-harbor buying on uncertainty about Egypt. Fewer than 24 hours after defying domestic and international pressure to step down, Mubarak finally gave in to nearly three weeks of demonstrators protesting his three-decade autocratic rule.
In theory, the departure of Mubarak should have led to unwinding of safe-haven buying that has buttressed the dollar.
Instead, it provided an excuse for investors to look more closely at the woes that continue to bedevil the euro zone, which has yet to resolve the sovereign debt crisis.
"Still percolating underneath it all is the concern that all things are not good in the periphery," of the euro zone, said Alan Ruskin, global head of G10 foreign exchange strategy at Deutsche Bank in New York.
After bouncing up to around $1.3570 in the wake of Mubarak's resignation, the euro fell to new session lows below $1.3500.
The Egyptian president's resignation did not come as a "massive surprise" to currency traders, Ruskin said, noting there was "still an extraordinary amount of uncertainty when talking about the transition phase" from Mubarak's government to a possible democracy.
Late Friday, the euro was at $1.3560 from $1.3602 late Thursday, according to EBS via CQG. The dollar was at Y83.40 from Y83.22, while the euro was at Y113.04 from Y113.13. The U.K. pound was at $1.6002 from $1.6093. The dollar was at CHF0.9730 from CHF0.9692.
The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at about 78.412 from about 78.199.
The dollar was buoyed Friday by constructive U.S. data, analysts said. Meanwhile, the euro has been constrained by uncertainty about the European Central Bank's succession plans and a lack of resolution of the bloc's debt woes. Because of this, the burst of buying of the common currency proved fleeting.
The ECB's plans to replace current president Jean-Claude Trichet were thrown into doubt Friday, after the German government announced that Deutsche Bundesbank President Axel Weber will leave his post on April 30.
Weber was widely expected to ascend to the ECB's top job, but his departure for "personal reasons" has left analysts wondering who will take his place--and whether that will alter the market's expectations that euro-zone interest rates will need to be raised sometime this year.
"After two days of intense speculation, there is finally clarity about Weber's central bank future, but no clarity at all about the next ECB presidency," said ING Bank analyst Carsten Brzeski. "The race for the next ECB presidency is now officially wide open."
Earlier in the session, data showed the U.S. trade gap widened in December, with the full-year trade deficit registering its biggest percentage increase in 10 years on the back of a record-high shortfall in trade with China and surging oil imports. Separately, the Reuters/University of Michigan consumer sentiment reading for mid-February edged up to 75.1, slightly better than the 75.0 expected by economists.
-By Bradley Davis, Dow Jones Newswires; 212-416-2654;
bradley.davis@dowjones.com “small step for man”