Dollar firms amid eurozone debt worries
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NEW YORK, Feb 8 AFP
February 09 2010, 09:26AM
The dollar firmed against the euro on Monday as the embattled European single currency remained under pressure from worries about sovereign debts piled up by Greece and other bloc members.
At 2200 GMT, the euro fetched 1.3648 dollars, down from 1.3673 dollars late in New York on Friday.
Against the Japanese currency, the dollar climbed a notch to 89.28 yen from 89.20 late on Friday.
"The euro's earlier gains were quickly undone as equity markets sank by late trading," said Kathy Lien at Global Forex Trading.
"Clearly debt concerns continue to drive markets. Credit default swaps for Greece, Spain, and Portugal remained volatile."
Wall Street stocks were hammered by the debt worries on Monday, pushing the Dow Jones Industrial down 1.04 per cent to a close below 10,000 for the first time since November 4.
At a weekend Group of Seven meeting in Canada, eurozone finance chiefs sought to reassure their G7 counterparts about Greece's deepening debt troubles but traders looking for any signal of a rescue plan were disappointed, analysts said.
"The euro continues to trade with an overall negative sentiment despite whatever assurances came from the G7 and eurozone officials with regard to the Greek debt crisis and any possible contagion," said Jon Gencher at BMO Capital Markets.
CMC Markets analyst Michael Hewson said the G7 meeting had "failed to deliver little more than rhetoric with respect to measures to deal with the ongoing problems of how to tackle European sovereign debt issues".
"The European finance ministers merely confirmed the substance and significance of Greece's attempts to deal with its deficit on its own without outside interference, amid market fears that politicians are sleep-walking into a full-blown debt crisis," Hewson added.
The euro in earlier trade received only a slight lift from remarks by eurozone finance officials at the G7 talks in Canada on Greece's efforts to rein in its public debt of more than 294 billion euros (412 billion US dollars).
"The European members of the G7 have confirmed to the other partners of the G7 the substance and the significance of the (debt-reduction) plan put together by Greece, and that they are confident that it will be managed," French Economy Minister Christine Lagarde said.
In recent weeks, the euro has been hammered by worries that debt-ridden countries such as Greece, Spain and Portugal may be unable to restore stability to their public finances, having spent heavily to combat recession.
"The contagion effect within the EU as a result of the continuing crisis in Greece is getting more and more serious," said an analysis from foreign exchange firm Currencies Direct.
"Both Portugal and Spain are being affected by the fallout from the crisis in Greece with Italy deemed not a long way off the market's radar."
In late New York trade, the dollar rose to 1.0733 Swiss francs from 1.0725 late Friday.
The pound fell to 1.5579 dollars from 1.5641.
Gold for current delivery closed at $1,065.70 per troy ounce on Monday on the New York Mercantile Exchange, up from $1,052.20 on late Friday.
