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The Yen Gains on Safety, The Euro Falls, and The Aussie Hits Multi Year Lows

“The euro fell the most in two weeks against the yen as Portugal’s bonds slumped after two ministers resigned from the government, reigniting speculation Europe’s debt crisis is worsening.

The 17-nation currency dropped for a second day against the dollar as borrowing costs also increased in Spain and Italy. The yen strengthened against all of its 16 major counterparts as declines in stocks boosted demand for Japan’s currency as a haven. Australia’s dollar fell to the weakest since September 2010 after Reserve Bank Governor Glenn Stevens said the economy “will probably get” a lower currency if needed. The pound rose after U.K. services expanded……

The euro dropped 1 percent to 129.30 yen at 6:53 a.m. in New York, the biggest decline since June 14. The shared currency fell 0.2 percent to $1.2958 after sliding 0.7 percent yesterday. The yen strengthened 0.8 percent to 99.79 per dollar.

Portugal’s 10-year bond yield jumped above 8 percent for the first time since November after Prime Minister Pedro Passos Coelho told voters in a televised speech from Lisbon late yesterday that he’s trying to hold his government together.

Second Resignation

Portuguese Foreign Affairs Minister Paulo Portas, leader of junior coalition party CDS, quit yesterday in protest at the government’s budget policy. Portas was the second minister to resign this week after finance chief Vitor Gaspar stepped down, saying his credibility had been compromised by the government’s failure to meet budget targets set by the European Union.

The euro also weakened after a report showed services industries in the region shrank at a faster pace in June than initially estimated.

An index of services activity based on a survey of purchasing managers was 48.3 last month, Markit Economics said. That’s less than an initial estimate of 48.6 on June 20 and below the level of 50 that divides expansion from contraction.

The euro has still gained 4.6 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar gained 6.7 percent, the best performer, and the yen tumbled 8.7 percent.

Aussie Drops…”

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