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MARKET REVIEW
May 5th, 2010 - Tags: market reviewPosted in Umum
Today the dollar rose for the umpteenth time against the euro amid speculation the European Union leaders fail to agree on an aid package to Greece at the summit this week, turned on the demand for U.S. currency as a refuge.
Dollar strengthened against 15 major currencies after European Central Bank President Jean-Claude Trichet spoke against offers low-interest loans to Greece. Swiss franc strengthened against the Euro after President Philipp Hildebrand, the Swiss central bank will act “tough” to deal with any profits “excess” of the strengthening of CHF.
“The dollar is stronger because of worries over the euro zone” said Simon Derrick, head of currency strategy at BNY Mellon Corp. in London.
When the news was released, the euro weakened to $ 1.3494 and 121.95 yen. Trichet also opposed to German Chancellor Angela Merkel is pushing sanctions against countries that violate the deficit limit could make the summit meeting March 25 to 26 with nil results.
Prime Minister George Papandreou said he would turn to the International Monetary Fund for help if needed. “It should not be any element of subsidy, there is no element of concessions” in potential loans to Greece, Trichet told lawmakers in Brussels yesterday. Merkel said in Berlin that no “concrete decisions” this week on the Greek aid. Luxembourg Finance Minister Jean-Claude Juncker, who heads the regional group of the European Union, said the EU would not “abandon” the Greek.
“Political debate among EU member Greece can continue to burden the euro,” said Kazumasa Yamaoka, a senior analyst at GCI Capital Co., which advises foreign currency, overseas investments and hedge funds. “It’s going to throw cold water on global stock until frozen.”
Bank of Greece said in a statement yesterday that monetary policy 2009-2010 Greek economy could shrink 2 percent this year, more than double the government’s latest estimates, due to conservation measures to curb Europe’s largest budget deficit in Greece. Greek deficit reached 12.9 percent, more than four times the EU limit of 3 percent, he said.
The banks in Greece will face “serious challenges” because of economic slump deepen the downturn in Greece. Euro could fall to $ 1.20 level for the first time since March 2006, according to BlueGold Capital Management LLP, when Greece beat the crisis between the ECB monetary policy and the Federal Reserve. “This is another reason for investors to be cautious about the euro.” UBS AG, the world’s largest currency trader, lowered estimates for the euro against the Swiss franc yesterday, predicted that a common European currency would buy 1.42 francs a month and 1.40 francs in three months.
