Posted by
Noreen Burke on April 25, 2010 |
One commentFriday saw the US dollar drop against the euro for the first time in four days after Greece made a formal request to tap the 45 billion euro rescue package offered by the European Union and the International Monetary Fund a short time ago. It had hoped that just the promise of EU support, agreed last month, would have been enough to reassure markets and help its recovery.
But Greece’s problems have continued to hit investor confidence in the euro and other European economies.
On Thursday Eurostat released figures which revised the Greek budget deficit up from 12.7% of GDP to 13.6% of GDP. The agency also said doubts over the figures meant they could be revised again. At the same time Greece’s benchmark 10-year bond yield soared to a record high of almost 9%.
On Friday morning Greece called for activation of the financial lifeline. The appeal for help from the EU and IMF came after the surge in borrowing costs to what Greek Prime Minister George Papandreou called “unsustainable levels”. Following Prime Minister Papandreou’s request for assistance the interest rate fell to 7.99% before creeping back up to 8.66%.
The fall is a sign of a slight increase in confidence in Greece’s ability to pay back its loans. But analysts said there was still significant uncertainty ahead. “The market’s relatively modest reaction to the news that Greece was formally requesting aid from the EU and IMF was a clear sign that the market still believes that Greece will be forced to restructure its debt even with a bail-out,” one analyst said.
The euro rallied in late in Friday’s forex trading, ending in New York 0.87% higher against the US dollar at $1.33837.
Meanwhile, politicians from Greece’s fellow euro zone members, France and Germany, have warned Greece it must be far more prudent in future. The French economy minister, Christine Lagarde said that the EU would come down hard on Greece if it failed to act responsibly: “In the case of default on repayment, we will immediately put the foot on the brake.”
Germany’s finance minister, Wolfgang Schaeuble, also said aid should not be taken for granted, but was conditional on prudent behavior. He said any loan depended “entirely on whether Greece continues in the coming years with the strict savings course it has launched”.
But Mr. Schaeuble also stressed the importance of currency union to his country. He said: “We are defending the stability of the euro, because Germany benefits (from the currency) at least as much as all the others. Help for Greece is therefore not a waste of taxpayer money, but a move based on fundamental German interests.”
The Greek government has already taken austerity measures, including cutting government workers’ pay, freezing pensions and raising taxes. The cuts have proved unpopular, prompting strikes and demonstrations such as a march through Athens on Friday in which several thousand protesters took to the streets.
Tags: currencies, EUR/USD, Euro, euro zone, forex daily, forex news, forex online, Greece and the euro, greek debt crisis, IMF
Posted by
Noreen Burke on April 21, 2010 |
No commentsThe UK’s week of critical economic releases continues today with the government hoping unemployment data will show the labor market continuing to strengthen as the country emerges from recession. Yesterday the pound rose against the US dollar and the euro ahead of the release of the unemployment data that is widely expected to show the number of Britons claiming jobless benefits declined for a second month as the recovery gathers pace.
The pound gained 0.1% to $1.5373 in early trading on the forex market today. It appreciated 0.2% to GBP 0.8734 against the euro and was 0.1% stronger at 143.33 yen.
Office for National Statistics figures are expected to show claimant count unemployment fell again in March by around 10,000. That would build on a drop in dole queues the previous month that at 32,300 was the sharpest reduction since the early days of Labor’s tenure in November 1997.
The jobless rate for February is expected to hold steady from January at 7.8% while the latest average earnings growth is expected to have picked up to 2.5% over a three-month period on a year ago from a rate of 0.9% the month before as more bonuses lifted the most recent number.
Evidence of an improving labor market would assist Prime Minister Gordon Brown as his ruling Labor party fights an opinion poll advance by the opposition Liberal Democrats. Data on jobs, the budget deficit and GDP this week will provide the final glimpse at the economy before the May 6th general election.
Gordon Brown is seeking to capitalize on the recovery after his term in office coincided with six quarters of recession. When Labor came to power under Tony Blair in 1997, the country had been out of recession for more than five years and unemployment was at 7.2%.
The number of people claiming the dole peaked at 1.63 million after the recent recession – around 1.4 million less than the 1980s and 1990s recessions. The number of claimants has been falling since the end of the downturn this time whereas in the 1980s it continued to rise for more than five years after the recession ended in April 1981 – peaking at over 3 million in June 1986.
An ICM Ltd poll published on the Guardian newspaper’s website on Monday showed support for the Conservatives down 4 points to 33%, and Labor down 3 points with 28%, while support for the Liberal Democrats surged 10 points to 30%.
Tags: currency trading, Euro, forex, forex analysis, forex daily, Forex market, forex news, forex online, forex qoutes, Forex Trading, GBP/USD, Pound, trade forex, US Dollar, Yen
Posted by
Noreen Burke on April 18, 2010 |
No commentsLast week saw the Yen advance against all of its most-traded counterparts on the Forex market as speculation that China will take further steps to slow its economy and Greece will trigger a $61 billion rescue package spurred demand for relative safety.
The US Dollar dropped to the lowest level against the Yen in almost a month on Friday as Goldman Sachs was sued by the Securities and Exchange Commission for fraud related to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. In a statement Goldman Sachs said the charges “are completely unfounded.”
Japan’s currency appreciated 0.95% to 92.156 against the US Dollar on Friday.
The Euro fell for two straight days versus the Yen before talks on Greece involving the European Union, the International Monetary Fund and the European Central Bank which are scheduled to begin in Athens tomorrow. European finance ministers have offered as much as 30 billion Euros ($41 billion) in three-year loans at about 5% interest, compared with the three-year Greek bond yield of 7.21%. Another 15 billion Euros worth of aid is to come from the IMF.
On Friday the Yen gained 1.4% to 124.44 per Euro after advancing 0.91% against the single currency the previous day.
Canada’s Dollar fell against the greenback for the first time in three weeks after touching parity for a second straight week, ahead of the Bank of Canada’s next policy meeting. The Bank of Canada will meet on April 20th to decide on interest rates. Governor Mark Carney signaled last month he’s open to raising the target lending rate as soon as June 1 as inflation and growth outpace forecasts.
New Zealand’s Dollar slid 2.1% to 65.31 Yen this week and Australia’s currency lost 2% to 85.18 Yen on speculation investors will reduce carry trades, in which they buy higher-yielding assets with amounts borrowed in nations with low interest rates. Japan’s benchmark interest rate of 0.1% has made the Yen a popular for carry trades.
Twelve-month non-deliverable Yuan forwards finished the week at 6.6185 per US Dollar, indicating traders now believe China’s currency may gain as much as 3% over the next 12 months. China has kept the Yuan pegged at about 6.83 against the US Dollar since July 2008. The currency had been allowed to rise 21% in the previous three years.
The Beijing statistics bureau said this week that the nation’s economy grew 11.9% from a year earlier, the biggest gain since the second quarter of 2007. China’s cabinet raised minimum mortgage rates and down- payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation after property prices rose at a record pace in March.
Singapore’s Dollar rallied the most against the greenback in six months, appreciating 1% to S$1.3756 as its central bank unexpectedly revalued its currency after the government raised forecasts for economic growth and inflation. The Monetary Authority said it will seek a “modest and gradual appreciation” in the local Dollar and shift to a stronger range for currency fluctuations, the first such combined move in its 39-year history.
South Africa’s rand was the biggest loser versus the US Dollar, declining 1.8% to ZAR7.390 on speculation the nation’s central bank will lower its target lending rate, now at 6.5%. The nation’s retail sales unexpectedly contracted for a 13th month in February, a report showed this week.
Tags: appreciate Yuan, Canadian Dollar Parity, currency trading, ECB, euro zone, foreign exchange, forex, forex analysis, forex charts, forex daily, Forex market, forex news, forex qoutes, forex rates, Forex Trading, greek debt crisis, IMF, trade forex
