31 May 2005, 11:30  Netherlands is also poised to vote down the constitution

The euro tumbled to a seven-month low against the dollar on Tuesday, extending a sell-off ignited after France's rejection of the European Union constitution compounded worries about the euro zone's struggling economy. The Netherlands is also poised to vote down the constitution on Wednesday, with polls showing the "no" vote running at 60 percent on the heels of a French vote that surprised analysts by the size of the "no" majority on heavy voter turnout. "Everyone's selling the euro. Everyone wants to push the euro lower," said a trader in Tokyo. France's prime minister was expected to step down on Tuesday in the wake of the referendum on Sunday, a week after German Chancellor Gerhard Schroeder called for early elections. French President Jacques Chirac was due to make an announcement about his government later in the day. The euro's sharp drop also dragged down sterling and the Swiss franc to seven-month lows versus the dollar, highlighting the U.S. currency's relative strength. The single currency struck a four-month low against the yen. "The French vote has just added one more reason to dump the euro on top of the weak euro-zone economy and inferior rate outlook," said Katsunori Kitakura, senior manager of forex at Chuo Mitsui Trust and Banking.

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