Greek Bond Sale Falls Short of Expectations
The US dollar gained on the troubled euro for the first time in 3 days after Greece’s bond sale fell short of expectations. The euro fell after the Greek bond sale prompted demand for less than half of the debt offered. The euro and dollar also fell against commodity linked currencies as oil and commodity prices rose. Sacha Tihanyi of Bank of Nova Scotia stated, “The euro is obviously still suffering. Canada is an excellent country from the sovereign-risk perspective, and Australia is very good as well.” Details of the EU IMF agreement remain unclear prompting investor concern. The greenback gained 0.6% on the euro trading at $1.3409 in morning New York trading. The dollar gained 0.4% on the yen trading at 92.80. Amazingly enough, the pound was the best performer and gained 0.7% vs. the dollar and last traded at $1.5101 after hitting a high of $1.5127. The euro hit a two month high against the yen but pared early gains as lingering concerns about Greece’s fiscal health linger.
Euro Zone Debt and ECB Rates Cause Concern
Analysts see limited euro gains due to euro zone debt problems and the perception that the ECB will not raise rates anytime soon. Daragh Maher of Credit Agricole CIB in London stated, “The uncertainties surrounding Greece and wider fiscal issue are still a problem.” The euro has gained about 1.5% against the dollar since last Friday when EU leaders announced a rescue plan for Greece. Commodity linked currencies gained as a rise in commodity prices boosted demand for the Aussie, Kiwi and Canadian dollars. The New Zealand dollar hit its highest vs. the greenback in a week after a government report showed that home building rose in February for the first time in three months. Imre Speizer of Westpac Banking Corp stated, “The sentiment around commodity currencies is more bullish this week and the data in both Australia and New Zealand is tracking pretty well.” The Aussie gained 0.2% vs. the greenback trading at 91.92 U.S. cents. The Kiwi remained at 70.98 U.S. cents. So far this month the Aussie has gained 1.6% vs. the greenback and the Aussie has gained 2.6%.
Pound Gains for Third Straight Day
The pound gained for the third straight day against the US dollar as reports showed that the UK’s GDP showed better than expected growth. The pound has been pressured by political concerns as investors remain concerned that election results could result in political gridlock crippling the nation’s ability to deal with an 11.8% budget deficit. In London the pound gained 0.7% vs. the dollar trading at $1.5092.
