FX round-up: Euro bounces on austerity measures

Date: Thursday 04 Mar 2010

The euro rose against the dollar after Greece announced its austerity package to rein in its budget deficit.

The euro climbed to $1.3720 from $1.3608 the previous session as it reassured the markets that it would take serious measures to relieve its debt-choked economy.

Some of the measures include wage cuts of up to 12% in the public sector, an immediate pension freeze and a hike in VAT. Greek Prime Minister Papandreou is to meet Angela Merkel on Friday to discuss the proposed fiscal package aimed at reducing its deficit by four percentage points this year.

Easing concern about Greece’s debt problems reduced the appeal of the dollar and sent the dollar index, which measures the US currency against a basket of six other major currencies, down to 79.956 from 80.512 the previous session.

The greenback was also 0.4% lower against the yen at 88.47 yen.

Sterling recovered a bit of ground on Wednesday and ahead of Thursday’s Bank of England Monetary Policy Committee meeting. The ECB also holds its meeting on Thursday and both central banks are expected to maintain interest rates and refrain from any changes to quantitative easing.

Sterling rose 0.7% to $1.5068, also helped by upbeat data. Figures showed a surprise surge in UK services sector activity while consumer confidence hit a two year high in February.

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