PIPS

The euro probed new lows last week, sinking below the $1.05 mark for the first time in its brief and unimpressive history. Traders say that the latest fall occurred because of concerns that Europe might be weakening its stance on minimizing budget deficits. The currency has dropped in value by 10 per cent since its launch. Few market participants interviewed by FX Week expressed much confidence that it would recover in the near future. "I don't see much upside potential right now," said a dealer in the New York market. "There's plenty of scope for more bad news, but I don't see the euro making a comeback in the short term."

FX traders in Latin America were busy last week, as instability returned to the region's markets. Speculation that Argentina might be forced to devalue its currency, fears of a possible hike in US interest rates and a rise in Mexico's trade deficit figures led to a wave of upheaval across the region. On Tuesday, the Mexican central bank was forced to intervene in the local currency markets, selling $65 million to support the Mexican peso.

Standard & Poor's, the US credit rating agency, has lowered Deutsche Bank's long term credit rating, ahead of the merger with Bankers Trust. Sources say the merger announcement is "imminent", which may account for the recent S&P rating. Deutsche's senior unsecured debt rating was downgraded from AA+ to AA and its long-term counterparty credit rating descended from AA+ to AA-.S&P says the downgrading is due to Deutsche's "failure to improve its core profitability and capital levels, mainly as a result of unfavourable cost structures and an ambitious expansion programme".

The golfing four from Delphis Consulting won the UK round of the Financial Markets Charity Golf Tournament, held at Walton Heath Golf Club near London last week. They will go on to play in the European finals at St Andrews in October. So far, qualifying rounds have also been played in the Netherlands and Spain. AEX Data Services will represent Holland in the finals, and Hoteles Catalonia will represent Spain. Over the summer, other national tournaments will be held in Germany, Belgium/Luxembourg, France and Switzerland. The tournament, hosted by Reuters, is raising money for Terre des Hommes, a charity that supports child-victims of violence. This year, the funds will go to support orphans of the civil war in Algeria. For further details, contact Alice Lonfat by telephone on +(41) 22-752-4162 or visit Reuters' Web site at http://www.reuters.com.

The Finance Foundation and Banca Intesa are hosting the Generation Bridge Conference on June 18-19 at the Cariplo Conference Centre in Milan. The conference will be on the theme of: "Euro & Dollar, Partners or Rivals: the Impact on Your Professional Life". There will also be a number of workshops, such as: "Does the euro introduce a fundamentally new quality to the relationship between the US and Europe?" Confirmed participants include Wim Duisenberg, president of the European Central Bank and representatives of the Deutsche Bundesbank, the National Bank of Greece, and Banque de France amongst others. For more details, contact Carlo Doneda at Banca Intesa on +(39) 02-8844-3821.

ADS Associates, a subsidiary of SunGard Data Systems, is to restructure and expand its global sales organization, following the launch of two new products, ValStar and CapStar in April. ValStar addresses the needs of fully integrated treasury operations, providing instrument coverage across FX, money markets, fixed income and derivatives. CapStar supports specialized dealings in the capital markets. "The launch of ValStar and CapStar answers the previously unfulfilled market need for fully packaged, specialized systems which combine proven performance with swift, assured implementation," says Giles Newman, head of global sales.

The CBOT has scheduled a June 24 membership vote for the proposed Eurex alliance. A previous proposal to cooperate failed when CBOT members voted against the alliance in January. The CBOT board also voted to proceed with a number of other initiatives, including unlimited access to Project A screens for members' proprietary trading, establishing competitive pricing for electronic trading and the exploration of opportunities to link with a cash trading system.

Banco Santander Central Hispano (BSCH) and Banco Comercial Portugues (BCP) are to pursue separate business objectives in Spain. To this end, both banks will relinquish the cross-shareholding accord, which has been in place since 1993. BSCH will recover the 2.7 per cent of its capital now held by BCP; and return the 13.8 per cent of BCP shares held currently by the Spanish bank. A statement issued by BSCH says: "The decision reflects both groups' interest in meeting new trends in the European banking sector, especially opportunities arising in the context of the euro."

Dresdner Bank officials have declined to comment on rumours that the bank is looking to acquire a stake in Italian bank UniCredito. Both German banks are reported to be eager to establish a presence in Italy, at a time when the Italian banking sector is becoming increasingly consolidated. Deutsche Bank and Commerzbank are already shareholders in UniCredito, and Banca Commerziale Italiana. Dresdner Bank recently acquired a 67 per cent stake in Milan-based brokerage Albertini.