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'The euro traded at almost the lowest level versus the dollar since September on speculation Germany and France will encourage Portugal to seek a bailout package.'

'“The U.S., in its role as the safe haven, is benefiting somewhat,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration. “There’s talk about France and Germany making a strong suggestion to Portugal that it may need to apply for financial assistance. That put some pressure on the euro.” '

Also, bondholders are scrambling to avoid being hit by new rules making them share the pain of Euro debt restructuring:

'A key trigger for new nervousness has come from the European Commission, which late Thursday proposed a region-wide framework for confronting bank and investment-firm failures that could see bondholders sharing the burden.

In a 100-plus page consultation paper that aims to abolish the excuse that a bank is too big to fail, the commission asked whether bank bondholders should share in paying for future bailouts. It is also seeking to give greater authority to national regulators over bank leadership and business strategies when a country's economic stability is at risk.

One trader at a Portuguese bank described these potential new rules as "the final killer" for Portugal, since it may lead to considerably higher funding costs for banks, especially weak ones. "Everyone is expecting the International Monetary Fund to enter the country now," he said.'
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