Euro weaker on Ireland bailout watch, Greek fiscal woes
By William L. Watts and Myra P. Saefong, MarketWatch
LONDON (MarketWatch) — The U.S. dollar was mostly higher versus major rivals Monday, with the euro slipping as investors focused on speculation Ireland may soon seek some sort of financial assistance.
“As the sovereign bond markets continue to anticipate a potential Irish bailout ahead of a meeting between finance ministers across Europe tomorrow, the euro continued its broad decline,” said Chris Walker, currency strategist at UBS. “The dollar remained stable as the focus remains firmly on the European debt woes.”
The U.S. dollar index (DXY 78.45, +0.37, +0.48%) , which measures the greenback against a basket of six major currencies, climbed to 78.464 from 78.106 late Friday in North American trading. See more tools and data on currencies trading.
The euro (EURUSD 1.3628, -0.0080, -0.5836%) traded at $1.3635, down from $1.3696 in late North American trading Friday.
News reports over the weekend and Monday said Ireland was under pressure from Germany and other European Union counterparts to seek a bailout in order to prevent the spread of financial market turmoil, even though Ireland doesn’t need to return to credit markets until the middle of next year. Read about Ireland and the potential for a bailout.
Speculation has mounted that Ireland may request aid ahead of a meeting of European finance ministers on Tuesday. A European Commission spokesman in Brussels said reports Ireland was facing pressure to accept a bailout amounted to exaggerations and repeated that Dublin hasn’t requested external aid.
”Is a deal good for the euro? The consensus view is that it is, though if all we see next is a shift in the focus towards Portugal and then Spain, it’s hard to see how the crisis is put resoundingly to bed,” said Kit Juckes, head of forex strategy at Societe Generale.
Also Monday, the European Union statistics agency Eurostat revised up its forecast of Greece’s government deficit to 15.4% of gross domestic product, up from an earlier estimate of 13.6% of GDP.
Greece, in turn boosted its forecast of its 2010 deficit to 9.4% of GDP, underscoring the challenges the country faces in getting its books in order, analysts said.
The British pound (GBPUSD 1.6065, -0.0083, -0.5140%) edged 0.2% lower versus the U.S. dollar to trade at $1.6072.
DXY 78.46, +0.38, +0.49%
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Against the yen (USDYEN 83.1200, +0.6800, +0.8248%) , the dollar traded at ¥82.98, up from ¥82.49 late Friday.
“We think that the [U.S. Federal Reserve’s] Treasury purchases [which began last Friday], will cap [dollar-yen] topside, and we maintain our three-month forecast of ¥82,” analysts at Barclays Capital said in a note to clients Monday.
