Forex - EUR/USD dips in wake of Greek default

Published 03/11/2012, 07:59 PM
Updated 03/11/2012, 08:01 PM
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Investing.com - The euro traded steady to lower against the dollar on Monday, down but stable after posting heavy losses late last week in wake of Greece's successful restructuring with private creditors, although terms under the deal prompted a key international association to declare the move a credit risk, hence a default.

In Asian trading on Monday, EUR/USD hit 1.3120, down 0.02%, up from a session low of 1.3106 and off from a high of 1.3125.

The pair was likely to find support at 1.3097, Friday’s low, and resistance at 1.3272, Friday's high.

The euro came under pressure on Friday after the International Swaps and Derivatives Association (ISDA) said Greece's recent debt restructuring with private creditors constituted a "credit event."

While most private creditors voluntarily accepted terms of the EUR107 billion restructuring, a few didn't, which prompted Athens to kick in collective action clauses to force holdouts into the deal.

The ISDA's ruling could mean credit-default swaps designed to protect investors against losses on Greek sovereign debt will kick in.

Fitch, meanwhile, cut Greece's rating to "restricted default" over the deal, while Moody's made similar declarations.

Meanwhile the dollar continued to curry favor in global markets after last Friday's strong jobs figures out of the U.S.

The Bureau of Labor Statistics on Friday reported the U.S. economy added a net 227,000 nonfarm payrolls in February, outpacing expectations for a gain of 215,000.

Meanwhile, the government revised January's figures upward to 284,000 from 243,000.

The numbers fueled already growing sentiment that the Federal Reserve will hold off on plans to buy assets from banks, a stimulus measure known as quantitative easing that weakens the dollar in exchange for price stability.

The euro was up against the pound and down against the yen, with EUR/GBP trading up 0.01% at 0.8373 and EUR/JPY down 0.13% at 108.10.





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