Euro confidence dropped to another low over fears that Portugal may need a second bailout, according to Bloomberg.The euro was at its weakest level in a week against the dollar, further fuelled by on-going negotiations between Greece and its creditors. Some investors believe that any agreement made in Athens will only create a temporary boost in confidence, speculating that Greek debt will still remain unstable after a refinancing.

There certainly is no magic wand in this scenario. It looks like Greece will avoid a default, but that won’t give investors the confidence to swarm back to its currency markets. Furthermore, there are new debt questions arising. Merrill Lynch said in a note to clients that: "Recent concerns that a PSI scheme could be an option for Portugal, if markets remain closed to the country next year, is a reminder of possible indirect contagion from the way the Greek crisis is handled."

The dollar improved on the lack of confidence surrounding these markets, making gains on half of its major counterparts. Japan refrained from selling yen in the foreign-exchange market this month, after it rose to a post-World War II high.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site