Euro buoyed by Greek government reassurances (video)
Currencies Direct May 28th 2015 - 2 minute read
Markets were kept jittery throughout the week by Greece’s liquidity problems, helping the US dollar to make gains against the euro. The Greek government’s reassurances to the International Monetary Fund (IMF) that it would strike a deal with its creditors and make its next IMF payment on 5 June helped European stock markets and the euro to a much-needed rebound yesterday (27 May).
European officials in Brussels were unconvinced, however, and insisted that a compromise is far from being reached any time soon – though the markets seemed happy enough to take Greece at its word, and EURUSD has moved back up to 1.0940. The IMF’s Christine Lagarde concedes that there’s much work to do on the Greek deal, though she’s confident that Greece will meet its commitments.
The euro got a couple of other boosts: Germany’s consumer confidence rose to a 13-year high, and Ewald Nowotny of the European Central Bank voiced his opinion that negative interest rates are a short-term phenomenon.
The next focus of attention for the markets will be German import prices, Spain’s GDP numbers, and consumer confidence figures from the Eurozone.
Dollar still has muscle against the pound
The Greenback has continued to strengthen against most of its counterparts as investors continue to flock to the US dollar as a reserve currency.
Expectations of the dollar’s future strength have risen, thanks to improved sets of economic data and US Federal Reserve chair Janet Yellen hinting to the markets that an increase in interest rates seems likely in 2015.
Those expectations of a rate rise have pushed Sterling back against the US dollar. With the Bank of England already clearly stating that there will be no action on interest rates until 2016, and no economic data out yesterday, the pound fell through the 1.54 level and it currently trades at 1.5365.
The Queen’s Speech, outlining proposed changes to UK legislation, was the main focus yesterday. Today attention in the UK will turn to GDP numbers, quarterly business investment reports, and the Index of Services. Over in the US, there’s a speech from John Williams of the Federal Open Market Committee to look forward to, as well as Unemployment Claims and Pending Home Sales prints.