Thursday March 4, 2010 - 22:11:22 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS - Euro dips on ECB, Greek woes; dollar up broadly
* Euro slips despite strong Greek bond sale
* ECB keeps low rates, to unwind some liquidity measures
* Trichet still sees uneven euro zone recovery
* Dollar higher vs yen; U.S. payrolls data due Friday (Updates prices)
By Steven C. Johnson
NEW YORK, March 4 (Reuters) - The dollar rose broadly on Thursday and the euro fell after the chief of the European Central Bank said recovery would be uneven, reducing the chances of a near-term rise in record low euro zone interest rates.
Analysts said worries about Greece and other heavily indebted euro zone countries also weighed on the euro, even as a sale of fresh Greek 10-year debt drew solid demand. [ID:nLDE6230XS]
Greece had announced plans on Wednesday for a further $6.5 billion in public sector pay cuts and tax hikes to whittle its budget deficit, though it was unclear if the measures will generate additional help from larger euro zone countries such as Germany and France.
While the ECB took a small step toward unwinding some extraordinary support for the economy of the 16-nation euro zone, it extended until October a program that provides unlimited funds to banks at flat rates, longer than most analysts had expected.
ECB President Jean-Claude Trichet said the move on the lending program was "exactly appropriate, taking into account the present situation." [ID:nLDE6232FX] and [ID:nLDE62307B].
"There's still a lot of concern about Greece and deficits, and that's a burden when it comes to tighter monetary policy. So that helped trigger a sell-off in the euro," said Kathy Lien, director of research at GFT Forex in New York.
The euro was last down 0.8 percent at $1.3585 <EUR=>. Earlier, it rose above $1.37 following the Greek debt auction.
As expected, the ECB on Thursday kept benchmark interest rates at 1 percent for the 10th month running.
Sterling fell 0.4 percent to $1.5036 <GBP=> after The Bank of England left rates unchanged and left emergency lending measures in place.
The dollar rose 0.8 percent to 89.12 yen <JPY=> and 0.8 percent to 1.0764 Swiss francs <CHF=>.
U.S. PAYROLLS DATA DUE
The Federal Reserve also is expected to hold interest rates at a record low near zero when it meets in mid-March. But most investors expect the Fed to raise rates before the ECB does, which also has lent support to the dollar. Higher interest rates make a currency more attractive to global investors.
Data showing a decline in the number of Americans filing for first-time jobless benefits also stoked hope about the U.S. economy. Markets expect Friday's key monthly report on non-farm payrolls to show employers cut 50,000 jobs last month, though analysts expect some of that will have been influenced by bad weather.
"The market is being a bit cautious ahead of payrolls," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto, though he added a better-than-expected number could provoke more dollar buying.
By contrast, he said, there are still "uncertainties about Greece, about the potential financial assistance it can expect, the opposition from domestic unions," he said. "Uncertainty is still very much with us, and that's why the market is not willing to take the euro much above $1.37." (Additional reporting by Vivianne Rodrigues; Editing by Leslie Adler)
Â© Thomson Reuters 2010. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."