Experts Predict Dollar Gains

A recent Bloomberg Professional Global Confidence Index showed that most experts believe the US dollar will gain during the next six months and expect the US economy to expand at a faster pace than European and Asian economies. Most economists expect the US Federal Reserve to raise rates before the European Central Bank or the Bank of Japan. The Greek fiscal crisis has also strengthened dollar confidence and most economists expect Greece’s debt woes to continue to undermine the euro. Meg Browne of Brown Brothers Harriman & Co said that, “Growth differentials and interest-rate differentials, and the fact that the U.S. is so far doing quite well compared with the euro-zone” have helped the dollar in currency markets. German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker said that credit- default swaps need to be regulated to shore up the multi nation currency and prevent a repeat of the Greek debt crisis. Shaun Osborne of Toronto-Dominion Bank stated, “The Greece situation was definitely something that helped the dollar recover. It started to take on a life of its own. Now the markets are waiting to see where we go from here.”

Greece Not Asking for Bailout says Prime Minister

Greece’s budget deficit is now at 12.7% of GDP which is four times what EU rules allow. Last week Prime Minister George Papandreou’s government announced measures designed to save 4.8 billion euros ($6.5 billion USD) and includes higher sales, fuel and tobacco taxes as the government struggles to shave 4 percentage to bring the deficit within EU limits. Greek Prime Minister George Papandreou said that US President Obama is supportive of Greek austerity measures. Papandreou also said after a meeting at the White House that he got a “positive response” from Obama about European efforts to limit market speculation. Papandreou said to reporters, “We’re not asking for a bailout, we’re not asking for financial help from anyone. What we are doing is first of all revamping our own economy. We are taking measures to put our economy on the right path.” US president Obama offered no statement after the meeting.

EU May Prohibit Speculative Credit Default Swaps

European Commission President Jose Barroso said that the EU may consider prohibiting “purely speculative” credit default swaps and German Chancellor Angela Merkel called for a halt to derivatives trading to prevent a repeat of the Greek debt crisis. In a speech two days ago Papandreou warned that the debt crisis in Greece also posed risks for the US as well as the EU. A White House spokesman said that the Obama administration believes that the EU should take the lead in addressing the Greek crisis. Administration spokesman Robert Gibbs stated, “This is an issue for the European Union. We believe they have and possess the capabilities to solve that.”