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Sunday, May 09, 2010 11:44:06 AM
Euro Closes The Week Sharply Lower
Armen Mirzoyan
The Euro (EUR) closed the trading week significantly lower against most of the other major currencies, as the Greek tragedy deepened and intensified fears among investors that it was spinning out of control and could spread across the other European countries eventually. Even the massive $140 billion bailout fund agreed on May 2 by the European leaders was not enough to calm the markets, despite the initial optimistic reaction of the investors. While the German, French, Greek and other European high ranking officials kept voicing their determination to contain the crisis and stand behind the common currency, markets grew increasingly doubtful that the huge bailout package would be able to save Greece from going bankrupt in the long run. Deadly riots in Athens did not help to build up markets’ shattered confidence in the Greek government’s ability to take the needed austerity measures either.
Much was expected from the ECB president Jean-Claude Trichet yesterday, when he talked to the press after the European Central Bank decided, as expected, to keep the interest rate unchanged at 1%. His comments, however, were hugely disappointing for the markets, as he confirmed that the ECB did not even discussed buying the Greek debt, as it lacks the mandate to do so. Another wave of a sell-off followed and the EUR hit new one-year lows against the US Dollar (USD) and the Japanese Yen (JPY), while dropping lower against other currencies, too.
The EUR/USD pair was one of the biggest losers this week, as it dropped from 1.3358 to 1.2521, before recovering a little on the rumors that the ECB would have a credit facility available for large European banks, in order to help with the liquidity issues at least in the short term. The currency pair closed the week at 1.2730, a sharp plunge from last week’s close at 1.3313. The EUR fell dramatically against the JPY as well, dropping from 125.40s to 110.40s, before pulling back up to close the week at 116.34.
http://www.benzinga.com/global/268567/euro-closes-the-week-sharply-lower
Armen Mirzoyan
The Euro (EUR) closed the trading week significantly lower against most of the other major currencies, as the Greek tragedy deepened and intensified fears among investors that it was spinning out of control and could spread across the other European countries eventually. Even the massive $140 billion bailout fund agreed on May 2 by the European leaders was not enough to calm the markets, despite the initial optimistic reaction of the investors. While the German, French, Greek and other European high ranking officials kept voicing their determination to contain the crisis and stand behind the common currency, markets grew increasingly doubtful that the huge bailout package would be able to save Greece from going bankrupt in the long run. Deadly riots in Athens did not help to build up markets’ shattered confidence in the Greek government’s ability to take the needed austerity measures either.
Much was expected from the ECB president Jean-Claude Trichet yesterday, when he talked to the press after the European Central Bank decided, as expected, to keep the interest rate unchanged at 1%. His comments, however, were hugely disappointing for the markets, as he confirmed that the ECB did not even discussed buying the Greek debt, as it lacks the mandate to do so. Another wave of a sell-off followed and the EUR hit new one-year lows against the US Dollar (USD) and the Japanese Yen (JPY), while dropping lower against other currencies, too.
The EUR/USD pair was one of the biggest losers this week, as it dropped from 1.3358 to 1.2521, before recovering a little on the rumors that the ECB would have a credit facility available for large European banks, in order to help with the liquidity issues at least in the short term. The currency pair closed the week at 1.2730, a sharp plunge from last week’s close at 1.3313. The EUR fell dramatically against the JPY as well, dropping from 125.40s to 110.40s, before pulling back up to close the week at 116.34.
http://www.benzinga.com/global/268567/euro-closes-the-week-sharply-lower
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