EU Nations to Aid Greece
The troubled euro gained against most major currencies on Tuesday after it was reported that EU finance Ministers had worked out strategies for Greek aid packages. The ministers backed plans by EU nations to aid Greece financially if it becomes the first EU nation to seek financial help. In a news conference in Brussels Spanish Economy Minister Elena Salgado stated, “It will be decided by the European Council (of EU leaders) when the time comes, if and when Greece were to ask.” Better than expected German investor confidence also helped the euro in currency markets. Aid to Greece will most likely come from EU nations pooling funds for direct loans to Greece. The EU meeting failed to resolve differences on which nations would offer loans and how long those loans would last. Speaking about the recent German figures and the current market environment Jessica Hoversen of MF Global Ltd stated, “A better-than-expected number counts more in this environment than it might otherwise. As long as the European plan forces peripheral nations to engage in the public retrenchment necessary to fix imbalances, the market will view it favorably.”
Fed to Keep Rates Low
The US dollar fell on expectations that the Fed will continue to keep rates at record lows. The Federal Open Market Committee will issue a statement today (March 16th) and most experts believe the Fed will leave rates low for an ‘extended period.’ Investors will be watching the Fed’s assessment of the US economy closely. Most expect the Fed’s economic assessment to be upbeat due to recent figures showing increased retail sales and more hiring by US employers. Brian Dolan of Forex.com stated, “The anticipation for the Fed is that they’re going to give a slightly more upbeat outlook for the U.S. economy, but at the same time they’re going to keep the language intact and not signal any rate increase any time soon. That combination is going to be risk positive.”
Loonie Hits 25 Year High vs. Pound
The Canadian dollar, affectionately called the ‘Loonie’ traded at its strongest level in two years and hit a twenty five year high vs. the British pound as commodities and stocks gained. Rising gold and oil prices were prompted ‘Loonie’ gains. Blake Jespersen of the Bank of Montreal stated, “Commodities are strong: Oil is up $2, gold is headed up, stocks are up, risk appetite has come back into the market that wasn’t there yesterday. With good fundamentals, on a relative basis, the Canadian dollar is strong for a reason.” Most experts believe the Canadian dollar will achieve parity with the US dollar sometime this year.
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