North-West Financial Broker
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25 Mar - Fundamental
The dollar rebounded Thursday following reports that European Central Bank president Jean-Claude Trichet has opposed a plan to aid Greece using support from the International Monetary Fund.
What prices are doing: The dollar was up 0.25% versus the euro to $1.3281 and gained 0.32% versus the U.K. pound to $1.4819. Against the Japanese yen, the dollar rose 0.44% to ¥92.71.
What's moving the market: The euro came under pressure after reports surfaced that ECB president Trichet said IMF aid for Greece would be «very, very bad.»
The euro had been regaining ground earlier Thursday amid reports that France and Germany had reached an agreement on how to deal with the fiscal crisis brewing in Greece, which would have included IMF participation.
European Union leaders met Thursday in Brussels to discuss economic matters at a highly anticipated two-day summit.
But the euro's advance was cut short after Trichet's remarks revived concerns that the fiscal problems facing Greece and other struggling EU members threaten to drag down economic growth across the entire region.
«This has been a headline driven market,» said Vassili Serebriakov, a currency strategist at Wells Fargo. While the details of Trichet's position remain unclear, his comments «triggered the further euro downside that we're seeing this afternoon,» Serebriakov said.
The dollar surged to a 10-month high Wednesday after ratings agency Fitch downgraded Portugal's credit rating one notch due to fiscal concerns.
What analysts are saying: «I think this is a story of disagreements within the EU, which undermines confidence in the euro,» Serebriakov said.
«This is the first real test of the euro zone institutional structure as it pertains to fiscal policy,» he said. «And the EU is not exactly passing it with flying colors.»
