Euro Gains vs. Dollar
The troubled euro has fallen for the third straight month vs. the US dollar as Greece’s debt crisis continues to threaten the multi nation currency. Last week the euro posted its first gain on the dollar in six weeks after a report said that Germany may purchase Greek bonds through a government lender. In February the euro fell 1.7% vs. the dollar and 3.2% vs. the yen. John Shin of Bank of America Merrill Lynch stated, “The Greek crisis has had a real macro impact in Europe. Growth forecasts have been pushed down and expectations for a rate hike by the ECB are on hold.” According to a Bloomberg survey of economists the European Central Bank is expected to keep its refinancing rates at 1% after the ECB’s policy meeting this week.
EU Pressures Greece For More Austerity Measures
Greek Economy Minister Louka Katseli said that Prime Minister George Papandreou will review Greece’s budget plans. A mission by the European Union to Greece found that the nation’s austerity measures are not enough to satisfy financial markets and that more measures are needed. Katseli told a television audience that, “If more measures are to be taken, they will be announced soon. The red line for everyone in this government is that the measures are effective, bringing additional revenues, and that they are socially just.” EU Economic Affairs Commissioner Olli Rehn will talk to the Athens government on Monday and markets are speculating that if Rehn’s talks are successful the EU may announce aid measures for Greece in exchange for further austerity measures. European Parliament Jorgo Chatzimarkakis of Germany said that Germany, France and the Netherlands would purchase Greek bonds through state owned financial institutions.
Merkel Says No Decision Made on Greek Aid
In a television interview German Chancellor Angela Merkel said that Greece has been “very courageous” in planning measures to address the nation’s budget deficit. Merkel repeated last weeks comments that the euro is facing its roughest period since the multi nation currency was launched in 1999. Many believe Merkel is trying to influence public opinion in a nation where opposition to Greek aid is high. Merkel said that no decision has been made for financial assistance to Greece and that the German government expected the Athens government to take whatever steps are necessary to resolve the crisis. Merkel stated, “There have been absolutely no other decisions taken. I would like to say that quite clearly. Greece has to do what’s necessary for Greece. But that is also important for all of us.”
Quick Forex Tip: Euro currency trading requires a lot of research and investors must keep track of economic information from the twelve member nations. The economy of just one nation can affect the euro’s exchange rate. In 2010 political uncertainty and deficit concerns about Greece caused the euro to fall considerably in global forex markets. Euro currency trading can be exciting and very lucrative for investors who have done their homework.
