Forex New's: Euro Plunges Amid Greek Fears
The euro tumbled to a fresh all-time low against the Swiss franc as anxiety over Greece's debt situation intensified, and other currencies seen as risky bets also fell. The turmoil in Greece overshadowed a slew of better-than-expected U.S. data. The euro was at $1.4129 early in New York trading, down from $1.4181 late Wednesday in New York. The dollar fell to ¥80.83 compared with ¥80.95, while the euro was at ¥114.20 compared with ¥114.80. The pound was trading at $1.6121 compared with $1.6193. Deepening worries about Greece's debt crisis and the possibility of contagion to other euro-zone countries briefly pushed the euro below $1.41 for the first time in three weeks. "The risk of the Greek crisis spiralling out of control has increased markedly," said Société Générale strategists in a note to clients. Concerns intensified as the Greek political outlook deteriorated Wednesday amid violent protests against cost-cutting measures. Greek Prime Minister George Papandreou said he would reorganize his cabinet then call for a vote of confidence in parliament after failing to reach an agreement with opposition parties on austerity measures demanded in exchange for new bailout by euro-zone nations and the International Monetary Fund. Two Greek lawmakers, including one seen as a candidate to replace the finance minister, resigned Thursday. Casting doubt on whether the IMF will deliver its expected aid, Zhu Min, a senior adviser to the fund said he is "very concerned" by the situation in Greece, adding that developments have taken a drastic turn for the worse in the last 24 hours. Adding to the negative tone were comments from European Central Bank Governing Council member Nout Wellink that the European Financial Stability Facility might have to be doubled in size to €1.5 trillion ($2.127 trillion) to secure private-sector support for a second Greek aid package and to cover potential risks from Ireland and Portugal. The cost of insuring against the risk of a Greek default rocketed, as investors started to weigh the chances of nonpayment. "With concerns about risks of a disorderly conclusion to the Greek crisis ratcheting ever higher, ahead of tomorrow's key Angela Merkel-Nicolas Sarkozy summit, the focus will be on Athens where Mr. Papandreou will seek to form a new cabinet and survive a parliamentary confidence vote," said Chris Scicluna of Daiwa Capital Markets. As soon as the Greek crisis is resolved, currency markets will move back to looking at fundamentals, said Peter Kinsella, a foreign-exchange strategist at Commerzbank in London. "In that case, you're looking at the ECB that is still hiking interest rates and the Fed that is more or less likely to keep rates on hold until at least the third quarter of 2012," he said, adding that in such a situation it's unlikely the euro could fall much further against the dollar. For now, though, a jittery tone persists. More broadly, the pound and commodity-linked currencies of Canada, New Zealand and Australia were also knocked down by the Greek situation, while the market's premium safe refuges in times of stress, notably the yen and Swiss franc, gained ground. The euro traded as low as 1.1957 Swiss francs—its lowest level on record—after the Swiss National Bank on Thursday delayed reining in its expansive monetary policy, even as it warns of a budding housing market bubble. It stood at 1.2004 francs early in the New York day. "The SNB offered no clear signs regarding a rate hike," said Commerzbank's Mr. Kinsella. "One important point though is they mentioned the residential real-estate sector is possibly overheating and one tool of dealing with that is increasing interest rates," he added.
The euro tumbled to a fresh all-time low against the Swiss franc as anxiety over Greece's debt situation intensified, and other currencies seen as risky bets also fell. The turmoil in Greece overshadowed a slew of better-than-expected U.S. data. The euro was at $1.4129 early in New York trading, down from $1.4181 late Wednesday in New York. The dollar fell to ¥80.83 compared with ¥80.95, while the euro was at ¥114.20 compared with ¥114.80. The pound was trading at $1.6121 compared with $1.6193. Deepening worries about Greece's debt crisis and the possibility of contagion to other euro-zone countries briefly pushed the euro below $1.41 for the first time in three weeks. "The risk of the Greek crisis spiralling out of control has increased markedly," said Société Générale strategists in a note to clients. Concerns intensified as the Greek political outlook deteriorated Wednesday amid violent protests against cost-cutting measures. Greek Prime Minister George Papandreou said he would reorganize his cabinet then call for a vote of confidence in parliament after failing to reach an agreement with opposition parties on austerity measures demanded in exchange for new bailout by euro-zone nations and the International Monetary Fund. Two Greek lawmakers, including one seen as a candidate to replace the finance minister, resigned Thursday. Casting doubt on whether the IMF will deliver its expected aid, Zhu Min, a senior adviser to the fund said he is "very concerned" by the situation in Greece, adding that developments have taken a drastic turn for the worse in the last 24 hours. Adding to the negative tone were comments from European Central Bank Governing Council member Nout Wellink that the European Financial Stability Facility might have to be doubled in size to €1.5 trillion ($2.127 trillion) to secure private-sector support for a second Greek aid package and to cover potential risks from Ireland and Portugal. The cost of insuring against the risk of a Greek default rocketed, as investors started to weigh the chances of nonpayment. "With concerns about risks of a disorderly conclusion to the Greek crisis ratcheting ever higher, ahead of tomorrow's key Angela Merkel-Nicolas Sarkozy summit, the focus will be on Athens where Mr. Papandreou will seek to form a new cabinet and survive a parliamentary confidence vote," said Chris Scicluna of Daiwa Capital Markets. As soon as the Greek crisis is resolved, currency markets will move back to looking at fundamentals, said Peter Kinsella, a foreign-exchange strategist at Commerzbank in London. "In that case, you're looking at the ECB that is still hiking interest rates and the Fed that is more or less likely to keep rates on hold until at least the third quarter of 2012," he said, adding that in such a situation it's unlikely the euro could fall much further against the dollar. For now, though, a jittery tone persists. More broadly, the pound and commodity-linked currencies of Canada, New Zealand and Australia were also knocked down by the Greek situation, while the market's premium safe refuges in times of stress, notably the yen and Swiss franc, gained ground. The euro traded as low as 1.1957 Swiss francs—its lowest level on record—after the Swiss National Bank on Thursday delayed reining in its expansive monetary policy, even as it warns of a budding housing market bubble. It stood at 1.2004 francs early in the New York day. "The SNB offered no clear signs regarding a rate hike," said Commerzbank's Mr. Kinsella. "One important point though is they mentioned the residential real-estate sector is possibly overheating and one tool of dealing with that is increasing interest rates," he added. 