by Deborah Levine
and William L. Wats
NEW YORK--The dollar rose Monday, pushing the euro down from a three-month high, after the Group of 20 nations refused to boost funding for the International. Monetary Fund until the euro zone boosts the size of its own firewall. In late-morning trading, the euro changed hands at $1.3411, down from $1.3449 late Friday. The common currency touched a three-month high versus the dollar last week. Mean while, the dollar dropped versus the yen after having risen above ¥81.60--near a nine-month high. The dollar traded at ¥80.55 compared with ¥106.94. The pound traded at $1.5842 from $1.5878, and the dollar bought 0.8987 Swiss franc from 0.8961 franc. The ICE dollar index, which tracks the greenback against six other currencies, rose to 78.54 from 78.341 late Friday. G-20 finance ministers, meeting over the weekend in Mexico City, said in communiqué that they supported adding funds, via the IMF, to shore up the euro zone’s finances. But Europe first must contribute more money, they said. The meeting “made one thing very clear: There is undoubted skepticism on the part of the international backers regarding the handling of the crisis in Europe,” said currency analysts at Commerzbank. “Many parties in particular stressed the necessity of an efficient mechanism for containing the crisis. It will be difficult for Europe to avoid these demands long term.”
and William L. Wats
NEW YORK--The dollar rose Monday, pushing the euro down from a three-month high, after the Group of 20 nations refused to boost funding for the International. Monetary Fund until the euro zone boosts the size of its own firewall. In late-morning trading, the euro changed hands at $1.3411, down from $1.3449 late Friday. The common currency touched a three-month high versus the dollar last week. Mean while, the dollar dropped versus the yen after having risen above ¥81.60--near a nine-month high. The dollar traded at ¥80.55 compared with ¥106.94. The pound traded at $1.5842 from $1.5878, and the dollar bought 0.8987 Swiss franc from 0.8961 franc. The ICE dollar index, which tracks the greenback against six other currencies, rose to 78.54 from 78.341 late Friday. G-20 finance ministers, meeting over the weekend in Mexico City, said in communiqué that they supported adding funds, via the IMF, to shore up the euro zone’s finances. But Europe first must contribute more money, they said. The meeting “made one thing very clear: There is undoubted skepticism on the part of the international backers regarding the handling of the crisis in Europe,” said currency analysts at Commerzbank. “Many parties in particular stressed the necessity of an efficient mechanism for containing the crisis. It will be difficult for Europe to avoid these demands long term.”
Credit Agricole analysts cited the $1.3550 level
as key resistance for the euro. They added that “the currency could still
stumble over coming days,” hinging on the outcome of a second round of
liquidity operations from the European Central Bank that has aimed at helping
the region’s lenders. The central bank is conducting its second three-year
long-term refinancing operation, or LTRO, this week. Markets are expecting euro-area banks to draw
around €450 billion ($605.21 billion) in fresh three-year financing, slightly
less than the €489 billion borrowed at the first LTRO in December, said
currency strategists at Forex.com.
“Should banks take up less than 400 billion Euros,
we think European government bond markets may be disappointed and we could see
yields start to move higher again, which might take some of the wind out of the
euro’s sails,” they wrote in a note. The dollar and euro had rallied sharply
against the yen in late Friday trading and early Asian hours, hitting highs of ¥81.66
and ¥109.95, respectively. However, both currency pairs then peaked, triggering
an unwinding of bets against the Japanese currency.
“Recent yen weakness was justifiable due to the
Bank of Japans’s strong declaration of war on deflation, and the rally in energy prices due to Japan’s total
dependence on energy imports,” said John Hardy, head of foreign-exchange
strategy at Saxo Bank.
“However, then yen’s weakness [was] seen getting
ahead of itself from other angles such as interest rates and risk appetite
caution ahead of Wednesday’s [ECB] long-term refinancing operation.” He said. Some traders said the yen move also triggered
selling of the euro against the dollar and sterling, with the euro slipping
below $1.34 after gaining around three cents the week before.
-Alexandra Fletcher contributed to this article.
Sources : The Wall Street Journal Newaspaper .
Tuesday, February 28, 2012
Sources : The Wall Street Journal Newaspaper .
Tuesday, February 28, 2012
