MWL Secretary General stressed the need for unrestricted delivery of humanitarian aid to the Palestinians by opening all crossings
world9 hours ago
Greece’s move to seek aid and the statement of support from Germany, which had initially been reluctant to make such a commitment, reassured investors the troubled nation’s debt problems could be resolved soon.
Analysts, however, remained skeptical about the aid mechanism from the European Union and International Monetary Fund worth 45 billion euros ($60.49 billion). The package is not likely to solve Greece’s longer-term problems in tackling its budget deficit. Most traders said the euro would have difficulty getting above $1.34 against the dollar.
“The German comments did lift sentiment on the euro and Greek assets, but I don’t think this is going to do much for Greece in the long term.” said Jacob Oubina, senior currency strategist at Forex.com in Bedminster, New Jersey.
“(The aid package) is like putting a Band-Aid on a broken leg at the end of the day. Greece has to really cut spending and reform the way its government balance sheet is structured.”
In early afternoon New York trading, the euro was up 0.6 percent against the dollar at $1.3370, after hitting a session high at $1.3380, according to Reuters data. Earlier, the euro sank to a one-year low against the dollar of $1.3202.
Richard Franulovich, senior currency strategist at Westpac in New York said despite the euro’s rally on Friday, “there is still a tremendous amount of skepticism in the market about this aid package and people in general are still comfortable selling the euro on any bounce.”
Two measures of sovereign risk also suggested caution, reflecting concerns over possible delays in the activation of the EU/IMF aid deal. The premium investors demand to buy Greek government bonds rather than euro zone benchmark Bunds, a gauge of perceived sovereign risk, climbed on Friday to 580 basis points, well off the session low of 525 basis points, while the cost of insuring Greek government bonds against default rose from intraday lows.
Greece expects to receive the first tranche of funds under the EU/IMF aid package before May 19, Finance Minister George Papaconstantinou said on Friday.
Worries about Greece have stung demand for risky assets and boosted the dollar, considered a safe bet in uncertain times. Against a currency basket, the greenback hit a one-month high of 82.074 before pulling back. It was last at 81.494, flat on the day.
Against the yen, however, the dollar rose 0.8 percent to 94.18 yen after earlier hitting a two-week high at 94.32.
The greenback was boosted by U.S. data that underpinned confidence in the economic recovery, including a surge in new home sales in March and gains in new orders for long-lasting manufactured goods excluding transportation.
“These are some large numbers. We’re looking for something between 3.5 percent and 4 percent on first-quarter GDP due out next week,” said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. “The market can go into the weekend comfortable that the U.S. recovery is still (in) full swing.”
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