Forex: Thursday's review
The euro advanced against the dollar for the first time in three days as European Union leaders began a two-day meeting on measures to contain the region’s sovereign-debt crisis.
The 17-nation currency gained against the yen as speculation the European Central Bank is poised to raise borrowing costs outweighed fiscal turmoil. The euro fell earlier against the dollar and yen as Moody’s Investors Service cut the ratings of 30 Spanish banks and after Portugal’s Prime Minister Jose Socrates resigned yesterday. Currencies linked to growth surged as raw material prices and equities rallied.
The euro extended its gains after breaking through the technical level of $1.4150.
European officials said a bailout for Portugal may total as much as 70 billion euros ($99 billion).
Portugal hasn’t asked for a bailout and the figures are preliminary, the officials said. The action would follow Greece and Ireland’s request of aid from the European Union and the International Monetary Fund.
Greece accepted a $110 billion-euro aid package from the EU and IMF in May 2009 and Ireland accepted an 85 billion-euro bailout fund in November.
Portugal made up about 1.8$% of the total 17-nation euro-zone gross domestic product in the fourth quarter last year, according to Eurostat, the European Union’s statistics office, and data, while Ireland accounts for 1.8% and Greece makes up 2.3%.
Spain, which investors have also speculated may need a bailout, accounts for 10.1% of the region’s gross domestic product.
EUR/USD: the pair become stronger in around $1.4180.
GBP/USD: the pair decreased in around $1.6120.
USD/JPY: the pair bargained within the limits of Y80.70-Y81.10.US data starts at 1230GMT, when fourth quarter GDP is expected to be revised up to a 3.0% rate of growth, while the chain price index is expected to be unrevised at +0.4%. Analysts have already turned their attention to the first quarter of 2011, however. At 1355GMT, the Michigan Sentiment index is expected to be revised down to a reading of 68.0 in March, still below the 77.5 reading in February.