Irish Eyes Are Crying, Part 11

Ireland's Labor Party just took a shillelagh to the bailout deal, and the euro just found a nice cliff to jump off of as a result.

The dollar rose against the euro on Thursday after an Irish political party said it would vote against an emergency European Union bailout for the country and a ratings agency cut Ireland's sovereign debt rating.

The euro fell to session lows around $1.3169 EUR= and was last trading at $1.3185, down about 0.5 percent on the day.

Ireland's Labor Party said it would vote against the 85 billion euro bailout when it comes before parliament next week, and traders said that raises concerns about Ireland's ability to service and redeem outstanding debt.

"Word the Irish Labour Party will vote against the bailout sent us down here to test the lows. Some longs are dumping euros here," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. "It's a question of people worrying about sovereign default risk, which is bad for the euro.

Fitch's move to cut its rating for Ireland, which secured an emergency European Union bailout last month, weighed on the euro.

The Irish bailout is not a done deal folks.  If the Labor Party is bailing on it (and the massive austerity chokehold it entails) then all kinds of chaos is coming down the pike.   Ireland's government may not have to votes to pass this deal, and if they don't, things are going to get problematic for the EU.