Forex: Weekly review
The dollar ended last week mixed versus major currencies: the dollar decreased 1% against euro, grown 0.6% against pound and fell 0.8% against yen.
On Monday the euro touched its lowest level since 2001 against the yen as speculation German Chancellor Angela Merkel is preparing for a Greek default curbed demand for the 17-nation currency.
Merkel’s government is debating how to shore up German banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment, three officials said Sept. 9.
BNP Paribas SA, Societe Generale and Credit Agricole SA, France’s largest banks by market value, led European equity declines after two people with knowledge of the matter said Moody’s Investors Service may cut their credit ratings as soon as this week because of their Greek holdings.
On Tuesday the euro fell toward its weakest level in a decade against the yen on speculation Greece is nearing default and as Italy’s borrowing costs rose at a sale of 3.9 billion euros ($5.3 billion) of bonds.
The 17-nation currency reversed yesterday’s gain versus the dollar amid uncertainty China will buy Italian assets.
On Wednesday the euro rose against the majority of its most-traded counterparts as optimism increased that area leaders will work to avoid a default in Greece and contain the region’s debt crisis.
On Thursday five central banks announced a coordinated plan Thursday to pump dollars into Europe's financial system in an effort to boost liquidity across the eurozone. The European Central Bank, along with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank will hold three dollar auctions for U.S. dollars, with a three-month maturity, through the end of the year. The coordinated move is aimed at providing U.S. dollars to struggling European banks that need the currency to fund loans and repay debt. All of the auctions will carry a fixed rate and be conducted as "repurchase operations against eligible collateral."
On Friday the euro fell, halting a two-day gain versus the dollar, after European finance ministers meeting in Poland ruled out efforts to prop up the region’s economy and gave no indication of providing added support for lenders.
The pound fell for a fourth week against the dollar on speculation a deteriorating economic outlook will spur the Bank of England to introduce additional monetary stimulus.