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The euro could get a lift early next week if a convincing bailout package for Greece is released over the weekend, but the rally is likely to be short-lived.
Even if the common currency gets a relief bounce based on the announcement details of a financial lifeline for Greece, the euro still won't have turned a corner. Other countries--such as Portugal--wait in the wings with their own problems of sovereign debt. The euro zone's growth potential also lags that of the U.S.
"This crisis is really likely to continue to haunt us for the rest of the year," said Michael Woolfolk, senior currency strategist with Bank of New York Mellon in New York.
The euro faces several headwinds, including whether German politicians will continue to oppose that country's participation in a Greek bailout. Greece itself also will be watched to see whether it can implement the belt-tightening programs the International Monetary Fund and European Union are likely to insist on as a condition for receiving aid.
Amid anticipation the details of the aid package would be announced over the weekend, the euro on Friday extended its recovery from 12-month lows hit earlier in the week.
"The euro's had an amazing ability to hold in," said Camilla Sutton, currency strategist at Scotia Capital in Toronto. Without significant progress over the weekend on the Greek debt crisis, it will begin to fade.
Traders continue to bet against the euro, said Ron Leven, currency strategist at Morgan Stanley in New York. The common currency's pattern is to grind into new lows each week, Leven added. Next week, he expects a range of $1.3050 to $1.3350.
The euro was at $1.3313 from $1.3238 late Thursday, according to EBS via CQG.
Trading in the euro and yen could be thin in the first part of the week with several European countries on holiday Monday, and with Japanese markets closed Monday, Tuesday and Wednesday its Golden Week national holidays.
The euro could come under further pressure at the end of next week if the U.S. releases another strong monthly employment report, considered the key indicator of the economy's march toward recovery.
Friday's U.S. nonfarm payroll data for April is expected to show 180,000 jobs added to the rolls, and could fuel expectations that the Federal Reserve is on track to tighten monetary policy before the end of the year, ahead of the ECB. That will boost demand for the dollar and add to the selling pressure on the euro, analysts said.
Also possibly giving the dollar a boost will be other key economic data next week, including manufacturing data and U.S. personal income, both due Monday, as well as U.S. pending home sales, due Tuesday.
Contrasting with a Fed seen as moving toward tighter policy, the Bank of Japan on Friday said it was considering pumping more money into its struggling economy.
The dollar is expected to trade next week between from Y91.35 to Y94.80. Friday afternoon, the dollar was at Y93.94 from Y94.07 late Thursday.
Meanwhile, in the U.K., focus will be on Thursday's general election. On Friday, the U.K. pound found some support, before slipping slightly, as opinion showed the Conservatives edging ahead in opinion polls. The pound had been pressured downward amid fears of a hung parliament, in which one party doesn't command a majority. |  |  |  |  |
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发表于 2010-5-1 05:18
发表于 2010-5-1 05:32
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