Euro-Zone Investor Confidence Falls, EURUSD Holds Below 1.36

Investor confidence in the Euro-Zone fell more than expected as the Sentix index slipped to -27.8 from -20.2 in September. A deeper look at the report showed that investor expectations plunged to -41.0 from -28.0 in the prior month, indicating that market participants expect the financial market to deteriorate further as the effects of the U.S. financial crisis spills into the global economy. Indeed, over the weekend, we saw the rescue package for Hypo Real Estate fail as new liquidity gaps emerged, which led the euro-dollar (EURUSD) to break below 1.36. Rising turmoil in the European economies suggests that investors may continue to hold a dour outlook going forward, which would only fuel bearish sentiment for the euro.

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