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Euro May Extend Gains EU Leaders' Comments Calm Greece Concerns

Data Analysis 08:45:48AM Mar 23, 2010 Source:SMM

NEWYORK, Mar. 23 -- The euro may extend gains against the dollar after European leaders tried to allay concerns that they were unprepared to aid Greece, easing pressure on higher- yielding assets.

The 16-nation euro is set to end a four-day loss against the yen after Luxembourg's Jean-Claude Juncker, who heads the group of euro-region finance ministers, said the EU will not "abandon" Greece. The franc touched the strongest level since the introduction of the euro in 1999 yesterday on speculation the Swiss National Bank is relaxing a policy of selling the currency to curb its strength.

"Any progress in discussions on financial aid for Greece will take some pressure off from the euro," said Toshiya Yamauchi, manager of foreign-exchange margin trading at Ueda Harlow Ltd. in Tokyo.

The euro was at $1.3555 at 8:23 a.m. in Tokyo from $1.3558 in New York yesterday when it reached $1.3464, the weakest level since March 2. The 16-nation currency traded at 122.31 yen from 122.21 yen yesterday when it touched 121.06, the lowest since March 5. The greenback was at 90.22 yen from 90.14 in New York.

The franc appreciated to a record 1.4309 per euro yesterday before trading at 1.4346.

Luxembourg Prime Minister Juncker said that "there is no urgent need to have a decision" at the Brussels meeting this week while assuring Greek policy makers that the EU will not "abandon" them.

Trichet, Barroso

European Central Bank President Jean-Claude Trichet said the ECB is prepared to reassess its collateral rules if necessary, softening its stance as Greece struggles to cut the region's largest budget shortfall. European Commission President Jose Barroso said the EU should spell out its aid measures at the March 25-26 summit in Brussels.

Barroso is pushing EU leaders to reach a deal on Greek aid at the meeting this week and is "hopeful" about an agreement, commission spokeswoman Pia Ahrenkilde Hansen told reporters in Brussels.

Gains in the euro may be limited after German Chancellor Angela Merkel told investors they shouldn't expect this week's EU summit to produce assistance for Greece.

EU leaders must not create "illusions" for markets by building expectations for Greek aid, she said in an interview with Deutschlandfunk radio.

"Political wrangling over Greece among EU members may continue to weigh on the euro," said Kazumasa Yamaoka, a senior analyst in Tokyo at GCI Capital Co., which advises on foreign currency, overseas investments and hedge funds. "This will throw cold water on riskier assets."

Franc Intervention

The franc rose even after the Swiss National Bank stressed it will continue to "act decisively" to prevent an "excessive" appreciation of the currency if needed.

SNB President Philipp Hildebrand is struggling to tame gains in the currency as deficits and debt in Greece, Portugal and Spain boost demand for the franc as a refuge. Its strength is fueling concern deflation will take hold after prices fell in two straight months for the first time in a year.

 

Key Words:  US dollar  US dollar index 

Euro May Extend Gains EU Leaders' Comments Calm Greece Concerns

Data Analysis 08:45:48AM Mar 23, 2010 Source:SMM

NEWYORK, Mar. 23 -- The euro may extend gains against the dollar after European leaders tried to allay concerns that they were unprepared to aid Greece, easing pressure on higher- yielding assets.

The 16-nation euro is set to end a four-day loss against the yen after Luxembourg's Jean-Claude Juncker, who heads the group of euro-region finance ministers, said the EU will not "abandon" Greece. The franc touched the strongest level since the introduction of the euro in 1999 yesterday on speculation the Swiss National Bank is relaxing a policy of selling the currency to curb its strength.

"Any progress in discussions on financial aid for Greece will take some pressure off from the euro," said Toshiya Yamauchi, manager of foreign-exchange margin trading at Ueda Harlow Ltd. in Tokyo.

The euro was at $1.3555 at 8:23 a.m. in Tokyo from $1.3558 in New York yesterday when it reached $1.3464, the weakest level since March 2. The 16-nation currency traded at 122.31 yen from 122.21 yen yesterday when it touched 121.06, the lowest since March 5. The greenback was at 90.22 yen from 90.14 in New York.

The franc appreciated to a record 1.4309 per euro yesterday before trading at 1.4346.

Luxembourg Prime Minister Juncker said that "there is no urgent need to have a decision" at the Brussels meeting this week while assuring Greek policy makers that the EU will not "abandon" them.

Trichet, Barroso

European Central Bank President Jean-Claude Trichet said the ECB is prepared to reassess its collateral rules if necessary, softening its stance as Greece struggles to cut the region's largest budget shortfall. European Commission President Jose Barroso said the EU should spell out its aid measures at the March 25-26 summit in Brussels.

Barroso is pushing EU leaders to reach a deal on Greek aid at the meeting this week and is "hopeful" about an agreement, commission spokeswoman Pia Ahrenkilde Hansen told reporters in Brussels.

Gains in the euro may be limited after German Chancellor Angela Merkel told investors they shouldn't expect this week's EU summit to produce assistance for Greece.

EU leaders must not create "illusions" for markets by building expectations for Greek aid, she said in an interview with Deutschlandfunk radio.

"Political wrangling over Greece among EU members may continue to weigh on the euro," said Kazumasa Yamaoka, a senior analyst in Tokyo at GCI Capital Co., which advises on foreign currency, overseas investments and hedge funds. "This will throw cold water on riskier assets."

Franc Intervention

The franc rose even after the Swiss National Bank stressed it will continue to "act decisively" to prevent an "excessive" appreciation of the currency if needed.

SNB President Philipp Hildebrand is struggling to tame gains in the currency as deficits and debt in Greece, Portugal and Spain boost demand for the franc as a refuge. Its strength is fueling concern deflation will take hold after prices fell in two straight months for the first time in a year.

 

Key Words:  US dollar  US dollar index