U.S. dollar is only sure thing

February 11, 2015 11:35 AM

Dollar, Euro

The Bloomberg Dollar Spot Index advanced to the highest level on a closing basis since December 2004, when data begins. The greenback added 0.7% to 120.29 yen and was little changed at $1.1309 per euro.

The premium to protect against declines in the euro versus the dollar over gains rose as high as 1.78%age points, the most since Jan. 23, according to one-month risk reversals.

“The risks for markets is there’s just a lot of uncertainty about the game of brinkmanship that’s being played between Germany and Greece,” said Mark McCormick, a foreign- exchange strategist at Credit Agricole SA in New York. “The dollar just gets a bid from safe havens.”

Germany is maintaining Greece must comply with its bailout terms, while Greece is trying to drum up support for a 10 billion-euro ($11.3 billion) bridge plan to stave off a funding crunch and buy time to win an easing in austerity terms. Any deal would require a softening of Germany’s stance.

Greek Assets

An impasse risks leaving Greece without funding by the end of this month, when its current bailout expires, and may put Europe’s most-indebted state’s euro membership in danger.

The officials began meeting at 5:30 p.m. in Brussels.

Greek equities fell for the fourth time in five days. Spain’s IBEX 35 Index and Portugal’s PSI 20 Index dropped more than 1.3%.

Greek 10-year bond yields rose 34 basis points to 10.58%. They’re up from 8.41% before Jan. 25 elections handed power to the Syriza party, which pledged to backtrack on austerity measures and lower Greece’s debt.

Treasury 10-year yields rose for a fifth day, having climbed from this year’s low of 1.64% set on Jan. 30. The Federal Reserve should raise interest rates in June on the basis of stronger U.S. data, Fed Bank of Richmond President Jeffrey Lacker said yesterday.

Brazil’s real slid 1% to 2.8637 per dollar, the weakest level on a closing basis since November 2004.

Ukraine Talks

Russia’s Micex Index gained 1.2%, advancing for the first time in three days, led by energy producers.

The ruble weakened 1% against the dollar. The currency has dropped about 8% this year, extending its 46% slide in 2014, as sanctions over Ukraine and a slump in oil prices dragged the economy to the brink of recession.

Russian, Ukrainian and European leaders are in Belarus for peace talks to end Ukraine’s 10-month conflict, with negotiations focused on how much authority to give to rebel-held eastern regions.

U.S. President Barack Obama called Putin Tuesday to reaffirm American support for Ukraine’s territorial integrity and address Russia’s support for the separatists, according to the White House.

Gold futures fell to the lowest in almost a month as gains for the dollar cut demand for the precious metal as an alternative asset.

Bullion futures for April delivery fell 0.9% to $1,221.50 an ounce in New York, after touching $1,221, the lowest since Jan. 11. Silver futures for March delivery slid 0.7% to $16.75 an ounce.

West Texas Intermediate crude fell to $48.41 a barrel after the biggest slide in four days as investors weighed forecasts for slowing U.S. oil output against signs that the market is oversupplied. Brent for March settlement dropped 3.1% to $54.70 a barrel in London.

Page 2 of 2
About the Author