Market Update: Euro Gains as Greek Fears Are Allayed
The euro saw some gains against the dollar (NYSE:UDN) Friday as European political leaders seem to be approaching a consensus on how to deal with Greece’s debt burden. This week the devaluation of the euro in the global market has sent investors trade in Japanese yen and Swiss francs, which tend to be safer, but also the British pound, which has the potential to gain along with riskier assets.
Today the euro rose 0.71% against the dollar, 0.1% against the yen, and 0.5% against the franc, while the dollar slipped against all three. The British pound rose 0.08% against the dollar. After today’s gains, the euro is still 0.4% down this week after hitting a three-week low against the dollar on Thursday, and the dollar is still up 0.2% on the yen.
German Chancellor Angela Merkel and French President Nicolas Sarkozy both spoke Friday in a joint news conference, stressing the fact that they were working to preserve the stability of the euro while dealing with Greece. They also said that any participation from the private sector in Greece’s new aid program would be entirely voluntary. The news conference helped to allay market fears about the possibility of Greece contaminating the European economy.
It’s also possible that Greek Prime Minister George Papandreou’s attempt to appease the public by replacing Finance Minister George Papaconstantinou with Evangelos Venizelos has actually worked, though they still plan to go forward with the unpopular austerity measures. However, as a Greek aid package seems to be forthcoming, other members of the EU are becoming less worried about Greece’s situation negatively impacting their economies.