Euro Continues to Gain as Greek Debt Is Settled

Posted March 31, 2010

Euro and Australian dollar rise. Investors are bolstered by Greek debt sale.


On Tuesday, currency trading markets showed that the euro was the currency to own as it continued to climb back. Traders turned back to the euro as the Greek debt is sold, reducing concerns about the euro zone and the country’s debt problems.

The Euro

In trading on Tuesday, the euro hit two month highs against the yen. It rose to one week highs against the US dollar. Investors had turned to the US dollar as concern over Greek debt continued to threaten the euro zone as the US dollar is considered a safer choice. However, not all of the concern is overcome.
The euro rose on Tuesday as currency traders covered short positions. Investors were bolstered at the news that Greece was able to raise the necessary funds from the market to repay the sovereign debt, following a pledge of financial support from the European partners, if it became necessary for the country to need it.

End of Quarter

Other factors also played a role in the euro’s improvement. For example, with the end of the first quarter this week, the euro was supported by position squaring. Many global firms and the Japanese financial year end at the end of this quarter. This, along with the sale of five billion euro on Monday to help the euro aided in making the euro look more attractive than it has in some time.

The US and Australian Dollar

As the trading went on, the euro continued to rise. It ended the day up against the yen, a high not seen for two months. It also moved past the US dollar to a point the euro had not been at for the last week. As a result, the US dollar fell against most major currencies. The Australian dollar, on the other hand, moved even higher during Tuesday trading. The Australian dollar continues to do well as speculation that the Australian central bank will raise interest rates in the coming month. Australia’s currency, as well as that of other commodity linked currencies, continued to do well in Tuesday’s trading as higher share and oil prices occurred. 

By the Numbers

On Tuesday trading, the euro gained nearly 1.5 percent against the US dollar (over Friday’s currency level), when Greece announced it had plans in the works to manage its debt. The euro stood at $1.3470 by mid day trading on Tuesday. It reaches $1.3539 in early trading during the day. That is the strongest point it has been at since March 23.

The euro moved up a half of a percent to 125.55 yen. That puts this at the highest point since the beginning of February. The euro would eventually hold at 124.7 yen on the day’s trading.

The US dollar fell by 0.3 percent. Oil prices hit $82 a barrel on Tuesday trading as well, bolstered by the euro’s strong moves. Against the Japanese yen, the US dollar rose 0.1 percent to 92.55.

The Australian dollar moved 0.3 percent to $0.9212 in trading on Tuesday. The Reserve Bank of Australia is expected to raise interest rates to 4.25 percent by next week.