Currencies April 18, 2011, 8:36 a.m. EDT Dollar rises as debt worries undercut euro By William L. Watts and Virginia Harrison, MarketWatch LONDON (MarketWatch) â The U.S. dollar gained ground against most major rivals, as a strong showing by an anti-euro party in Finlandâs national elections and rising fears of a Greek debt restructuring put Europeâs 17-nation shared currency under heavy pressure. The dollar index (BOARD-DXY) , which measures the greenback against a basket of six currencies, rose to 75.251 from 74.867 in late North American trading Friday. The euro dropped to $1.4303 from $1.4429 Friday. See real-time currency quotes and tools. Rising bond yields on the euro-zoneâs periphery, including Spain, translated into pressure on the euro, analysts said. Read more about Finland and Greece weighing on the European bond market. Sundayâs national election in Finland saw the anti-euro True Finns garner 19% of the vote, the third-largest total behind the pro-European National Center Party at 20.4% and the euro-skeptic Social Democrats at 19.1%. The pro-European Center Party came in fourth. The strong showing by the populist True Finns has raised fears that the Finnish parliament could block or hamper a pending bailout package for Portugal. Adam Cole, global head of forex strategy at RBC, said the True Finns are unlikely to derail an expected â¬80 billion ($114.6 billion) bailout for Portugal, but said horse-trading in coming weeks over the formation of a new coalition government could leave the euro vulnerable to headlines. âIndications that the new coalition government will include the True Finns or, to a lesser extent, the Social Democrats [are] likely to be knee-jerk euro-negative,â Cole said. âConversely, signals from the Center Party that it would consider being part of the coalition would likely be knee-jerk euro- positive.â Greeceâs finance ministry on Monday denied a Greek news report that the government asked the European Union and International Monetary Fund to begin talks on restructuring debt. The story nonetheless helped fan worries of a potential restructuring. âThe euroâs strength this year has been a waiting game on how long the markets can shrug off fears about euro-zone default. This waiting game stops with the inevitable scenario of Greek debt restructuring, which will cause collateral damage to Europeâs banking system and contagion across Europeâs most vulnerable sovereign borrowers,â wrote strategists at Brown Brothers Harriman, in a research note. Speculation over the possibility of a Greek restructuring and the Finnish election results were credited with boosting borrowing costs at a Spanish T-bill auction Monday and with contributing to renewed upward pressure on peripheral euro-zone bond yields. The British pound (U.S.:GBPUSD) slipped 0.3% versus the dollar to trade at $1.6267. Against the yen, the U.S. dollar (U.S.:USDYEN) fell to Â¥82.83 from Â¥83.58 Friday. The Australian dollar (U.S.:AUDUSD) edged down 0.3% versus the U.S. dollar to trade at $1.0520 as overall risk appetite appeared to wane. Over the weekend, China raised its bank reserve requirement for the fourth time this year. Read more about the rise in Chinaâs reserve requirement. âThe Australian dollar appears to have weathered the latest installment of Chinese tightening fairly well. Generally speaking, commodity prices have not shown any adverse effects to anticipation of further Chinese rate hikes, which is allowing the Australia dollar to better absorb tightening moves by China than was previously the case,â Tim Waterer, senior FX dealer at CMC Markets, said in a note to clients.
Here's a general story on the market weakness in Europe. http://www.msnbc.msn.com/id/42641750/ns/business-eye_on_the_economy/
T Y BCE 04/18/2011 09:04 DJ China PBOC Adviser: Expect More Policy Tightening All Year 04/18/2011 09:05 *DJ S&P Revises US's Outlook To Negative From Stable
April 18, 2011, 9:10 a.m. EDT S&P cuts U.S. ratings outlook to negative WASHINGTON (MarketWatch) -- Standard & Poor's cut its ratings outlook on the U.S. to negative from stable while keeping its Triple-A rating on the world's largest economy. "More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said Standard & Poor's credit analyst Nikola G. Swann. U.S. stock futures plunged on the news, with Dow industrial futures falling 167 points.