Dollar Fights Back Versus Euro As Greece Fears Resurface
The dollar steadied versus the euro on Friday, as a meeting of European finance ministers raised new questions about whether Greece will default on its sovereign debt obligations.
Days after a teleconference between German and French leaders raised hopes that the powerhouses will backstop Greece, headlines from the EcoFin meeting in Poland signaled frustration with Greek austerity efforts.
The euro zone ministers have now delayed $11bn of bailout loans blocked until October, by which Greece must show it has made appropriate reforms.
U.S. Treasury Secretary Timothy Geithner was at the Poland meeting. He encouraged his European counterparts to ministers to consider leveraging the 440 billion euro EFSF bailout fund.
Authorities took steps to shore up the fragile European banking system on Thursday, as the European Central Bank announced it will conduct three new dollar liquidity operations in cooperation with the Federal Reserve, Bank of Japan, and Bank of England.
The dollar improved to $1.3760 after slipping to $1.39 in the previous session. With today’s modest advance, the dollar moved back toward a 7-month peak of $1.3494 set last weekend.
The buck edged up to Y76.90 versus the yen, staying away from a record low of Y75.93.
There was little movement near $1.58 versus the sterling.
U.S consumer attitudes improved slightly in the first couple weeks of September, according to the results a closely-watched survey released on Friday. The results were better than expected.
In its preliminary reading for September, the Reuters/University of Michigan’s consumer sentiment index came in at 57.8. This was up from the final reading of 55.7 for August.
The euro area trade surplus surged in July on rising exports, data from Eurostat showed Friday. However, the seasonally adjusted trade balance showed the deficit stagnating at the June level.
The trade surplus increased to EUR 4.3 billion in July from EUR 0.1 billion in June. The surplus was well above the EUR 2 billion excess expected by economists.
