Euro Gains Limited
The euro gained slightly as Greek fiscal worries persist. During the last few weeks the euro has been undermined by persistent worries over the health of some EU member nations. Euro gains were limited as investors await the results of a meeting of European Union finance ministers. Nick Bennenbroek of Wells Fargo stated, “A brief pause in European related headlines perhaps offers hope for a corrective bounce (in the euro) in the coming days.” EU nations told Greece on Monday to implement measures to reduce its deficit by mid March. The euro has fallen 5% against the US dollar since the beginning of the year on concerns about the fiscal health of Greece, Portugal and Spain. Fears of a European debt crisis have pushed the dollar to its highest in nine months vs. the euro.
ECB May Delay Rate Raise
Many traders and investors believe that The European Central Bank may have to delay raising rates to address the budget crisis in several EU member states. The US Federal Reserve is on track to raise rates soon which has pushed the dollar higher in currency markets. Prime Minister George Papandreou said his country is ready to implement necessary measures to reduce the nation’s deficit. Omer Esiner of Travelex Global Business Payments said, “There’s been a little moderation of concern about the debt crisis. Investors are still wary about the situation, but most of the bad news is reflected in the value of the euro. It’s come a long way down in a short period of time.” Greek government workers have threatened a 24 hour strike to take place on Wednesday to protest the budget cuts.
Aussie Gains on Japanese GDP Data
The Aussie dollar gained after the Australian central bank said further rate increases are likely if the nation’s economy continues to improve. According to Bloomberg there is a 25% chance that the Reserve Bank of Australia will raise rates by 25 basis points at it’s March 2nd meeting. The Aussie also gained after a report showed that business confidence rose after the Reserve Banks decision to keep rates the same temporarily. The Aussie gained for the second straight day after Australian policy makers released the minutes of their Feb. 2nd meeting which said that their decision to keep rates the same was “finely balanced” and also said policy makers needed time to monitor overseas events. Greg Gibbs of the Royal Bank of Scotland Group Plc in Sydney said the minutes have “a fairly strong indication that they’ve got further hikes to do, which should be somewhat positive for the Aussie. There’s probably not enough risk of a tightening in March priced into the market.”
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