Euro Falls against US Dollar on Greece Concerns

March 19, 2015 - Written by Frank Davies

STORY LINK Euro Falls against US Dollar on Greece Concerns

The Euro tumbled by almost 2% against the US Dollar as market attention focused on a European Union meeting to discuss the Greek bailout crisis. With neither Athens nor its creditors appearing willing to back down on reforms the market is growing increasingly concerned that Greece could be forced to leave the Eurozone.

‘The feeling among the political leaders is that Greece and Greek politicians have to live up to their responsibilities here. The ball is in their court. The Prime Minister asked for time and space and he has been given that to come forward with sustainable and workable proposals. Greece needs to reflect on that very quickly because time is running out,’ said Irish Prime Minister Enda Kenny.

Ahead of the start of the talks, European Parliament President Martin Schulz warned Thursday that Greece’s financial situation was “dangerous”, with debt payments looming.

Prime Minister Alexis Tsipras has requested a meeting with the leaders of Germany, France and the main EU institutions on the sidelines of a European Union summit to press for Athens to be allowed to raise short-term funds to keep itself afloat. German Chancellor Angela Merkel said that no deal would be reached at the meeting; instead, a breakthrough is more likely to occur next week when Greek Prime Minister Alexis Tsipras goes to Athens to hold talks with Merkel.

The concerns over Greece and the diverging monetary policies of the Federal Bank and European Central Bank allowed the US Dollar to continue its strong rally and shrug off mixed domestic data releases.
Manufacturing activity was shown to have expanded by its slowest pace in 13 months in March, adding to concerns that the world’s largest economy is experiencing a slowdown. According to the Federal Reserve Bank of Philadelphia, its manufacturing index deteriorated to a reading of 5.0 this month from February’s reading of 5.2. Analysts had expected the index to rise to 7.1 in March. The fall was blamed on harsh winter weather.

A separate report meanwhile showed that the number of Americans filing for unemployment benefits increased by a less than forecast figure last week. According to the Washington based Department of Labour, the number of claimants increased by 1,000 to 91,000. Economists had been forecasting for a rise of 2,000.

‘There is little evidence that the businesses have responded to weaker growth in the US economy this quarter by cutting workers,’ said Moody’s Analytics Ryan Sweet.

The ‘Greenback’ could make further gains if the European current account data comes in below forecasts.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Currency Predictions Daily Curre Forecasts