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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (28313)	5/5/2010 12:33:05 PM
From: RockyBalboa	Read Replies (2) \| Respond to of 71455

FOREX-Contagion fears push euro to 14-month low vs dollar * Euro down more than 3 percent over three days * Germany warns euro debt crisis must stop at Greece * Dollar rises broadly as investors buy as safe haven * U.S. private sector adds jobs in April (Updates prices, adds detail) By Steven C. Johnson NEW YORK, May 5 (Reuters) - Fear that a euro-zone debt crisis may spread beyond Greece knocked the euro below $1.29 for the first time in more than a year and rattled bond markets in Portugal and Spain as anxious investors snapped up dollars. The euro plunged as low as $1.2805 <EUR=>, its lowest since March 2009, as German Chancellor Angela Merkel warned the debt crisis could spread in Europe if a 110 billion euro ($146.5 billion) Greece rescue plan does not succeed. For details, see [ID:nSGE644093] "We're at a fork in the road," she told German lawmakers. "This is about nothing less than the future of Europe -- and with it, the future of Germany in Europe." [ID:nLDE6440HH] Kenneth Broux, market economist at Lloyds Banking Group in London, said traders are gunning for $1.25 as "the next big level on the downside." The euro was last down 0.9 percent on the day at $1.2865 <EUR=>. Over the last three days, it has lost more than 3 percent against the dollar, its worst performance since shedding 3.9 percent over a three-day period in January 2009. "It's tough to see a bottom," said Joe Manimbo, a trader at Travelex Global Business Payments in Washington. "There are deep-seated concerns about the situation in Greece and overall fiscal health in Europe." The euro fell 1.3 percent <EURJPY=> to 121.29 yen and hit its lowest level against sterling since August <EURGBP=D4>. The dollar fell 0.5 percent to 94.14 yen <JPY=> but rose sharply against nearly all other currencies, hitting one-year highs against the Swiss franc <CHF=> and a basket of currencies <.DXY>. Sterling hit a five-week low against the dollar <GBP=D4> at $1.5068 a day before Britain's parliamentary election, with two polls pointing to a "hung parliament," but regrouped to trade at $1.5111, little changed from late Wednesday. EYES ON IBERIA Anxious investors also cut exposure to European stocks and drove up the cost of insuring Greek, Spanish and Portuguese debt against default, while taking refuge in the dollar. While Spain and Portugal are not in as parlous a bind as Greece, both have high budget deficits and have become targets of speculators who consider them the next weakest links in the 16-country euro zone. Moody's on Wednesday put Portugal's credit rating on review for a possible downgrade, and yields on short-dated Portuguese debt soared. [ID:nLDE6441NZ] "Contagion fears are driving the market and add to pressure on the euro, as does the ongoing civil unrest in Greece that may make it hard to institute reforms," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. The protests in Greece turned violent on Wednesday, and three people burned to death in Athens when demonstrators set fire to a bank to protest planned Greek tax increases and cuts to wages and pensions. [ID:nSGE644093] US ECONOMY ON THE MEND? The dollar got an added boost after data showed U.S. private employers added 32,000 jobs last month, bolstering the view that U.S. interest rates will likely rise from record lows well before rates in the euro zone. The data on hiring by private employers comes two days ahead of the government's key monthly report on non-farm payrolls. [ID:nN05176572] But analysts said the data was just an added incentive for investors to do what they've been doing for weeks: buy dollars. "The dollar is the safe haven of first choice." said BNY Mellon currency strategist Michael Woolfolk. "This is a market that is looking for any excuse to sell the euro. Good news out of the U.S. or bad news out of Europe, take your pick." Analysts said some are wondering whether the European Central Bank, which will hold a monthly meeting Thursday, will buy euro zone government debt to relieve pressure on countries hit by contagion fears. However, unnamed sources quoted by Market News International said officials were reluctant to take that step. [ID:nLDE6441O8] "You can't rule out the possibility the ECB could institute new measures, and that would amount to monetary easing, which is not good for the euro," Dolan said. (Additional reporting by Wanfeng Zhou and Vivianne Rodrigues; editing by Leslie Adler) ((steven.c.johnson@thomsonreuters.com; +1 646 223 6346; Reuters Messaging: steven.c.johnson.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: topnews.reuters.com)) Keywords: MARKETS FOREX Currency bid prices at 11:23 a.m. EDT (1523 GMT). All data taken from Reuters calculated from the levels at 4:30 p.m.(2030 GMT) in the previous New York session. Last US Close Pct YTD Pct 2009 May 4 Change Change Close ------------------------------------------------------------- Euro/dlr <EUR=> 1.2865 1.2980 -0.89 -10.14 1.4316 Dlr/yen <JPY=> 94.180 94.620 -0.47 +1.38 92.900 Euro/yen <EURJPY=> 121.16 122.84 -1.37 -8.92 133.03 Dlr/swiss <CHF=> 1.1134 1.1033 +0.92 +7.52 1.0355 Stg/dlr <GBP=> 1.5114 1.5244 -0.85 -6.44 1.6154 Dlr/cad <CAD=> 1.0290 1.0243 +0.46 -2.17 1.0518 Aus/dlr <AUD=> 0.9060 0.9082 -0.24 +0.98 0.8972 Euro/swiss <EURCHF=> 1.4324 1.4322 +0.01 -3.39 1.4827 Euro/stg <EURGBP=> 0.8510 0.8573 -0.73 -3.94 0.8859 Nzd/dlr <NZD=> 0.7161 0.7198 -0.51 -1.13 0.7243 Dlr/Norw <NOK=> 6.0526 6.0354 +0.28 +4.47 5.7934 Euro/Norw <EURNOK=> 7.7890 7.8341 -0.58 -6.11 8.2955 Dlr/Swed <SEK=> 7.5097 7.4030 +1.44 +4.88 7.1602 Euro/Swed <EURSEK=> 9.6615 9.6212 +0.42 -5.65 10.240 All spots <FX=> Tokyo spots <AFX=> Europe spots <EFX=> Volatilities <FXVOL=> Tokyo Forex market info from BOJ <TKYFX> World central bank news [CEN] Economic Forecasts...<ECON> Official rates...[INT/RATE] Forex Diary.......[MI/DIARY] Top events........[M/DIARY] Diaries...........[DIARY] Diaries Index........[IND/DIARY] Press Digests.....[PRESS] Polls on G7 economies..[SURVEY/] European markets......[MARKETS/] Keywords: MARKETS FOREX