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Forex rates - The euro rebounded from early losses against the dollar, as hopes for a resolution to the debt crisis are robust.
Still, traders and analysts said they expect the euro to remain under pressure, particularly if the European Central Bank's new president's warning of a "mild recession" before year's end comes to pass.
ECB President Mario Draghi made his forecast after the central bank surprised the market by cutting a key interest rate by 25 basis points to 1.25%.
That move sent the euro tumbling below $1.37, before recovery later in the session. Even after the rate cut, all eyes were on Greece, as Prime Minister George Papandreou resisted calls to resign. Meanwhile, the Group of 20 meeting in Cannes served as another platform for discussions on how to prevent Greece's crisis from dragging down the region's other fragile economies.
Late Thursday, the euro was at $1.3822 from $1.3748 late Wednesday, according to EBS via CQG. After the rate cut announcement, it had slipped to $1.3656. Against the yen, the euro was at 107.92.
Greek events are "overshadowing even the rate cut," said Fabian Eliasson, head of currency sales at Mizuho Corporate Bank in New York.
"The euro is surprisingly resilient," said John McCarthy, head of foreign exchange trading at ING in New York. He predicts the euro will "lurch" between $1.36 and $1.38.
Barclays Capital has an even dimmer view of the currency, predicting it will depreciate toward $1.30 by the end of the year.
In another sign that Europe's financial system is under stress, swapping euros into dollars is becoming extremely expensive, according to a leading indicator that is at its widest level since December 2008.
The three-month euro/dollar cross-currency basis swap is at minus 118 basis points versus minus 102 basis points on Wednesday. That's still shy of the minus-215 basis-point level it reached amid the financial turmoil of October 2008, but the indicator is now trading at levels where bankers say it is flashing warning signals about the functioning of money markets.
The debt crisis in Europe has created stronger demand for dollars, making it more pricey to get access to such funding.
"The widening of the cross-currency basis swap has been driven by the rising risk of a Greek default and concerns about potential spillovers to the rest of the periphery," said Brian Smedley, interest rate strategist at Bank of America Merrill Lynch. "It is becoming more expensive to secure dollar funding versus euros through the FX swap market as the market prices in greater risks of a disaster scenario in Europe."
Meantime, the U.K. pound was at $1.6035 from $1.5940.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 76.669 from about 77.017.
The dollar barely budged versus the yen on Thursday, trading at Y78.06 from Y78.04 on Wednesday. It stood at CHF0.8778 from CHF0.8840
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Still, traders and analysts said they expect the euro to remain under pressure, particularly if the European Central Bank's new president's warning of a "mild recession" before year's end comes to pass.
ECB President Mario Draghi made his forecast after the central bank surprised the market by cutting a key interest rate by 25 basis points to 1.25%.
That move sent the euro tumbling below $1.37, before recovery later in the session. Even after the rate cut, all eyes were on Greece, as Prime Minister George Papandreou resisted calls to resign. Meanwhile, the Group of 20 meeting in Cannes served as another platform for discussions on how to prevent Greece's crisis from dragging down the region's other fragile economies.
Late Thursday, the euro was at $1.3822 from $1.3748 late Wednesday, according to EBS via CQG. After the rate cut announcement, it had slipped to $1.3656. Against the yen, the euro was at 107.92.
Greek events are "overshadowing even the rate cut," said Fabian Eliasson, head of currency sales at Mizuho Corporate Bank in New York.
"The euro is surprisingly resilient," said John McCarthy, head of foreign exchange trading at ING in New York. He predicts the euro will "lurch" between $1.36 and $1.38.
Barclays Capital has an even dimmer view of the currency, predicting it will depreciate toward $1.30 by the end of the year.
In another sign that Europe's financial system is under stress, swapping euros into dollars is becoming extremely expensive, according to a leading indicator that is at its widest level since December 2008.
The three-month euro/dollar cross-currency basis swap is at minus 118 basis points versus minus 102 basis points on Wednesday. That's still shy of the minus-215 basis-point level it reached amid the financial turmoil of October 2008, but the indicator is now trading at levels where bankers say it is flashing warning signals about the functioning of money markets.
The debt crisis in Europe has created stronger demand for dollars, making it more pricey to get access to such funding.
"The widening of the cross-currency basis swap has been driven by the rising risk of a Greek default and concerns about potential spillovers to the rest of the periphery," said Brian Smedley, interest rate strategist at Bank of America Merrill Lynch. "It is becoming more expensive to secure dollar funding versus euros through the FX swap market as the market prices in greater risks of a disaster scenario in Europe."
Meantime, the U.K. pound was at $1.6035 from $1.5940.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 76.669 from about 77.017.
The dollar barely budged versus the yen on Thursday, trading at Y78.06 from Y78.04 on Wednesday. It stood at CHF0.8778 from CHF0.8840
Forex Tags:
Trading,forex trading,forex rates,forex exchange,online forex,forex trade,forex market,forex factory,forex rate,forex bank,broker forex,finanzas forex,Lonjakan,forex factory,forex robot,forex 外汇,forex club,i forex,forex forum,forex pakistan,forex trader forex, trading, ,trader, forex trading, trading ,index, trading forex, 4x, deutsche bank, forex trading, bank deutsche, trade fees, ameitrade, ameritrade trade, ameritrade bonus, waterhouse securities, ameritrade financial, www tdameritrade com, ameritrade offer codes, ameritrade employment, money market ameritrade.
http://online.wsj.com
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