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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (71716)	12/15/2009 8:03:58 AM
From: Haim R. Branisteanu	Respond to of 74559

Very important "walk to the Church" and the results is for all to see Dollar Higher, Euro Hit On Greek, Austrian Fears By Nicholas Hastings Of DOW JONES NEWSWIRES LONDON -- The dollar is higher in Europe Tuesday as confidence in the U.S. economic recovery increases and market participants await hawkish comments from the Federal Open Market Committee meeting later this week. The euro, meanwhile, has come under pressure from continued disappointment about the recovery in the euro zone, Greece's failure to come up with a credible debt recovery plan as well as concern about Austria's banking system. "Last night's eagerly awaited speech from Greek Prime Minister George Papandreou appears to have done little to convince the markets that the government is taking decisive steps to tackle its fiscal crisis," said Jonathan Lyones, chief European economist with Capital Economics in London. Apart from the steady stream of better-then-expected data from the U.S. over the last week or two, the dollar is also benefiting from the news that Wells Fargo has joined Citigroup in repaying its emergency bailout loans from the U.S. government. The repayment indicates that the banking system continues to rebound as the U.S. recovers from last year's credit crunch crisis. Although the Federal Reserve isn't expected to hike rates or even start exiting its unconventional policy at its next FOMC meeting Thursday, market participants expect the central bank to at least acknowledge the improved outlook. The next event to watch Tuesday will be the release of new industrial production data. These are expected to show that there was a rise of 0.5% last month, up from the 0.1% increase seen in October. Meanwhile, fear of sovereign debt default remains very much a market issue despite Abu Dhabi's recent bailout package for Dubai. Greece's failure to convince the market that it will cut its deficit in the next few years was followed by news that Standard & Poor's had downgraded Mexico's credit rating. Although the S&P move was widely expected, it just added to the uncertainty about sovereign risk. Moody's, another credit rating agency, warned that 2010 will be "a tumultuous year for sovereign risk." For the euro, matters were only made worse by the surprise nationalization of Hypo Group Alpe Adria by the Austrian government. The multibillion-euro bailout came after European Central Bank President Jean-Claude Trichet personally intervened, urging swift action to prevent contagion through the country's whole banking system. Elsewhere, the latest ZEW survey from Germany showed business sentiment falling, with the index down at 50.4 this month from 51.1 last month. However, economists had expected the index to decline as far as 49.5. By around 1020 GMT, the dollar had risen to Y89.29 from Y88.61 late Monday in New York, according to EBS. The euro fell to $1.4552 from $1.4651 and was at Y129.90 from Y129.81. The dollar was also up at CHF1.0397 from CHF1.0323, while the pound has fallen to $1.6258 from $1.6300. ---By Nicholas Hastings, Dow Jones Newswires; 44 20 7842 9493; nick.hastings@dowjones.com