Resurgent Dollar Holds Gains As Europe Crisis Intensifies
The dollar held most of this month’s strong gains versus its European counterparts on Monday, as markets rejected Greece’s latest attempt to delay a full-blown sovereign debt crisis.
Greece on Sunday announced a new set of austerity measures to meet deficit reduction targets. However, critics are calling it another attempt to delay an inevitable default.
Other European nations are again feeling the impact of Greece’s profligacy. French banks are reportedly set for a downgrade from the major ratings agencies due to their exposure to debt on Europe’s periphery.
Germany is exploring the various aspects of a potential default by the debt-ridden Greece, reports said over the weekend.
“To stabilize the euro, there must not be any taboos,” Philipp Roesler, economy minister and leader of Chancellor Angela Merkel’s coalition partner, the Free Democrats, told Die Welt.
That includes an orderly bankruptcy of Greece, if the necessary instruments are available, he added.
“Greece needs to meet the agreed fiscal targets and implement the agreed structural reforms to fulfil the conditionality and ensure funding from its partners,” said Europe’s economy commissioner Olli Rehn.
The dollar was steady near $1.36 versus the euro, after hitting a 7-month high of 1.3493 overnight.
At the same time, the dollar broke through resistance to hit 1.5772 against the sterling — its highest since January.
The dollar briefly edged above parity versus its Canadian counterpart, and nudged above CHF 0.89 versus the Swiss franc for the first time since May.
While the dollar has strengthened against most majors, there has been little movement against the yen, leaving the buck around Y77. The dollar hit a record low Y75.93 from back in August.
Dallas Federal Reserve President Richard Fisher is due to speak on monetary policy in a global context to NABE annual meeting in Dallas at 5 pm ET.
Looking ahead to this week’s economic calendar from the U.S., traders are expected to pay attention to the results of the New York and Philadelphia Federal Reserves’ manufacturing surveys for September, the Federal Reserve’s industrial production report, the Commerce Department’s retail sales report for August and the weekly jobless claims report.
Additionally, the preliminary reading of the Reuters/University of Michigan’s consumer sentiment survey and the producer and consumer price inflation reports for August may garner some attention. The Labor Department’s import and export prices report for August, the business inventories report for July, the Treasury Budget for August, a Fed speech and The Treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.
