All Entries Tagged With: "euro"
Can Greece Survive?
Now that the European Central Bank has signaled another interest rate rise in July, forex traders are once again turning their attention to Europe’s sovereign debt troubles. The poster child for these is Greece, which is balancing on the brink of calamity. Greece stands to suffer even more pain if the ECB does indeed raise [...]
European Inflation on the Front Burner Again
Now that Greece has reached an agreement with the “troika” of the European Union, the European Central Bank, and the IMF, forex traders are waiting to hear from the ECB on the inflation issue. Will the bank’s chairman once again declare that the ECB must exercise “strong vigilance” regarding inflation? The last time Jean-Claude Trichet, [...]
Euro Rises on Greek Deal, But Long-Term It’s China That Matters
The European Commission, the European Central Bank, the International Monetary Fund, and Greece have concluded a new agreement that will send more euros to the troubled country in exchange for an acceleration of Greek efforts to privatize about $72 billion of the country’s assets. The EC, the ECB, and the IMF – collectively called the [...]
Strong Euro, Weak Eurozone
Nobel laureate and New York Times columnist Paul Krugman wrote a recent blog post explaining why the euro continues to exhibit strength while the eurozone itself is in serious trouble. The short answer is, “It’s the interest rates, stupid.” Krugman puts it more elegantly, but that’s the nub of the answer. The strong countries at [...]
Sovereign Debt Woes Spread in Eurozone
Fears of contagion in Europe are mounting following a downgrade of Italy’s credit rating from ‘stable’ to ‘negative’ by Standard & Poor’s. The country did maintain its A-rated long-term debt and its ‘A1+’ short-term debt rating, but there are worries about political gridlock following election losses by Italy’s ruling party. While the ratings change is [...]
A Way Out for Ireland
Irish economist Morgan Kelly recently published in The Irish Times a short history of the European Central Bank’s bailout of Ireland’s banks. The short version of Kelly’s thoughts on the subject is that Ireland got a bad deal, but there’s a way to get out of it. Kelly points out that the Irish government’s guarantee [...]
Dollar Stronger Due to Euro Debt Worries
Last week’s news that the euro core members were meeting to discuss Greece’s withdrawal from the single currency turned out to be false. That didn’t stop the euro’s slide, which dropped the EURUSD rate from 1.44 down to almost 1.40 in just a few days. Compared with the US dollar, the euro is now viewed [...]
Euro Falls on Possibility Greece Will Flee
In the past week, the EURUSD has fallen below 1.43 on rumors that Greece would leave the European Monetary Union. This is not the first time the notion has been floated, and just like those other times Greek and EU officials strongly deny that such a move is being contemplated. But its not the worst [...]
Dollar Bounces Up, Commodities Down
The decision by the European Central Bank to leave interest rates at their current level of 1.25% came as no particular surprise. However the comments from ECB president Jean-Claude Trichet following the decision roiled the currency markets. Trichet avoided the phrase “strong vigilance” with regard to inflation, choosing instead to say that the ECB would [...]
More Sentiment for a Chinese Appreciation
US Federal Reserve chairman Ben Bernanke’s history-making press conference, following a meeting of the Fed’s open market committee last week, didn’t produce any surprises. The Fed plans to continue its QE2 program until its scheduled expiration at the end of June; core inflation is not yet a problem; and there is no interest rate hike [...]
