Greek Debt Progress Supports The Euro - 28.9.2011

Stock markets rallied yesterday on speculations Europe is getting closer to contain the debt crisis. Today however Asian markets were mixed and the yen and the dollar rose slightly before reports that may show signs of slowing global growth. US Dollar The dollar fell yesterday against almost all its counterparts as demand for refuge decreased amid a progress in Greece’s bailout deal. On the other hand economic data in the US remains weak. Confidence among US consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades, according to Bloomberg. The confidence index increased to 45.4 from a revised 45.2 reading in August that was the lowest since April 2009, showing a limited personal spending outlook. Another report showed the leading indicator for the US residential housing market in 20 metropolitan areas, S&P/Case-Shiller 20 index, fell by 4.1% in July from a year earlier, compared with a revised 4.4% drop in the 12 months to June. At the same time the Federal Reserve Bank of New York said that any success for government efforts to stimulate the economy will be limited unless policies are combined with steps to aid the housing market. “We need to fold in some pretty serious housing policies at the same time, not just to get housing going, but to get the full benefit of all these policies,” a bank’s representative said. Today negative data series may continue as, according to preliminary estimation, the Commerce Department may report US durable goods orders fell in August by 0.5% after a 4.1% gain in July, signaling that production may decrease as well. The dollar index feel yesterday to a one-week low – 77.39, after climbing earlier this week to a seven-month high – 78.86. Euro The euro touched yesterday a one-week high against the dollar and the yen, while stocks and commodities rallied after Greek Prime Minister George Papandreou won a vote on a new property tax in parliament to meet deficit-reduction targets and German Chancellor Angela Merkel expressed her support to the Greek efforts, promising to help the country to prevent default. The Greek parliament approved late yesterday the property tax increase by voting 155 against 142, after Finance Minister Evangelos Venizelos told Greeks they will face economic collapse if they don’t plug a budget gap that is exceeding the target set in a bailout, putting an 8 billion-euro aid payment due next month at risk. German Chancellor Angela Merkel, meanwhile, reiterated her support for Athens’s efforts during a meeting with Greek Prime Minister George Papandreou in Berlin. “Germany is prepared to provide every assistance that is needed,” she said. “We want a strong Greece in the euro zone,” and Papandreou said that Greece is “committed to do what it takes to return to stability.” After touching yesterday 1.3667 against the greenback, the euro fell in Asian trading hours today to 1.3541. Swiss Franc The Swiss franc fell in Asian trading hours today against the dollar and the yen as data showed the country’s consumer demand dropped to the lowest in almost two years in August, adding to signs the economy is cooling. The consumption indicator dropped to the lowest level since September 2009 – 0.79 from 1.28 in the previous month, compared with a long-term average of 1.5. The nation’s GDP will probably expand at a slower pace than it was previously estimated due to the franc’s appreciation and faltering global demand, according to the KOF Economic Institute’s report issued yesterday. Swiss GDP may increase by 2.3% in 2011 and by 1.5% in 2012, while previous forecasts predicted a 2.8% and a 1.9% increase respectively. In 2013, the economy may grow by 2.5%, the Institute said. Pair USD/CHF rose today from 0.8961 to 0.9001 following a three-day decline from its five-month high at 0.9182.