Dollar Back On Defense As Merkel, Sarkozy Defend Greece
The dollar fell for a third day versus the euro on Wednesday, as leaders from Germany and France insisted that Greece will stay in the monetary union by meeting promises to slash government spending.
Stocks were sharply higher as traders took in headlines from a conference call involving Prime Minister George Papandreou, French PM Nicolas Sarkozy and German Chancellor Angela Merkel.
“Putting into place commitments of the programme is essential for the Greek economy to return to a path of lasting and balanced growth,” Sarkozy and Merkel said in a joint statement.
The dollar eased to $1.3765 versus the euro, having touched a 7-month high of $1.3494 over the weekend.
Europe has the capacity to confront its sovereign debt crisis and will not allow its largest to fail, U.S Treasury secretary Timothy Geithner said Wednesday.
Europe won’t allow a Lehman Brothers event to happen, Geithner told CNBC’s Jim Cramer ahead of his meeting with European Union finance ministers in Poland.
U.S. retail sales were unchanged in August, according to government figures released Wednesday, disappointing economists, who had generally expected a slight advance. In addition, July’s growth, which had represented the strongest performance since March, was revised lower.
The Commerce Department revealed that August sales figures came in at $389.5 billion, virtually unchanged from the June figure.
Meanwhile, industrial production in the Eurozone bounced back in July on the back of a marked pick up in German factory output, data released by Eurostat showed Wednesday. However, the increase was not as strong as expected.
Industrial output increased 1 percent on a monthly basis in July, reversing a 0.8 percent drop in June.
The dollar dropped to a 10-day low of Y76.60 versus the yen, edging back toward an August record low of Y75.93.
Falling oil prices helped the dollar stay a penny below par versus its Canadian counterpart.
