The U.S. dollar gained against all of its major counterparts, except the Japanese yen, on widespread risk aversion as speculation that Greece will be unable to avoid a default drove stocks lower. Asian stocks fell after China raised banks’ reserve requirements to cool inflation and Central bank Governor Zhou Xiaochuan said monetary tightening will continue for “some time.” The greenback could see continued strength throughout our trading session as U.S. stock futures foreshadow a lower open for American shares. The U.S. dollar also rallied versus the New Zealand dollar as data showed consumer prices for the island nation rose less than forecast and the prices of many commodities fell. With only the NAHB Housing market index due out later this morning, expect the greenback to trade with the prevailing risk sentiment. Tomorrow sees the release of Housing starts, followed by existing home sales on Wednesday. Weekly jobless claims and the Philadelphia Fed survey are slated for Thursday morning. There will be no economic data released on Friday, as many markets will be closed for the Good Friday holiday. Banks will remain open on Friday.
The Euro fell over 1.0% against the U.S. dollar on speculation Greece will be unable to avoid default, even after officials said debt restructuring isn’t being discussed. The cost of insuring Greek government debt rose to a record today, with contracts indicating investors see a 65% the nation will default within five years. Greece received a bailout from the European Union and the International Monetary Fund last year, and has been followed by Ireland and Portugal in seeking aid. The common currency also came under pressure on concern election gains by Finland’s euro-skeptic block will hinder regional efforts to assist ailing nations. The True Finns political party will seek a majority that allows them to block the euro region’s bailout mechanism, party leader Timo Soini said over the weekend. Nevertheless, concerns over the periphery countries may not be enough to stop the European Central Bank policy makers from raising interest rates again this year. Indeed, Austria’s Ewald Nowtony said in an interview that expectations that the key rate will be increased by another 50 basis points in 2011 are “well founded.”
The Japanese yen gained against all of its most-traded rivals as global equities faltered, boosting demand for the yen as a safe-haven. Asian stocks fell as China’s central bank raised the reserve requirement ratio for lenders for the fourth time this year. The effort to cool inflation is also likely to weigh on growth, lowering stocks. The ration will increase by 0.5 percentage points effective April 21, the People’s Bank of China said today.
The British pound fell versus the U.S. dollar as lagging global equities boosted demand for the greenback as a safe-haven. Ernst & Young cut its yearly growth forecast and indicated it sees no pressure for the Bank of England to raise interest rates. U.K. domestic product may rise 1.8% instead of the 2.3% projected in January. The economic docket showed that London home sellers raise asking prices to a record in April. Average asking prices in the capital rose 1.6% from the previous according to Rightmove Plc.
