Euro dips to decade-long low against greenback
The Euro's Friday fall against USD is indicative of a long term trend.
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Hawke’s Bay
Approval of an extension of the Greek bailout and mixed US economic data are key factors behind the euro falling to below €1.12 against the US dollar last Friday.
The currency fell by 0.0003 (0.03%) to just under €1.12 against the $US at one point during trading on Friday– the lowest the euro has been against the $US since 2003.
The euro has recovered slightly against the greenback since then but Friday's fall is indicative of a long-term trend.
The decline in the euro has been largely attributed to last week’s decision by the European Union to extend Greece’s bailout agreement.
Under the extension agreement, the Greeks had to present a proposed list of budget cuts and economic overhauls.
Once these measures were implemented, the Greeks would receive the next bailout package of €7.2 billion.
Greek finance minister Yanis Varoufakis outlined his government’s plan in the form of a letter to Eurogroup president Jeroen Dijsselbloem.
The plan included a disciplined approach to budgets, spending and tax collection.
On the other side of the Atlantic, a recent burst of confidence from US investors saw the $US strengthen.
Although US Federal Reserve chairwoman Janet Yellen announced last week that the Federal Open Market Committee (FOMC) will continue to keep rates low, she outlined that they will consider an increase in the US interest rate on a “meeting-by-meeting basis.”
Despite her comments, there is a broad consensus among commentators that rates will be pushed up mid-way through this year.
However, Ms Yellen did outline the FOMC’s optimism about US employment.
“There has been important progress toward the FOMC’s objective of maximum employment,” she told House Financial Services Committee last week.
Added to the positive US economic news were optimistic numbers in the US housing sector.
The National Association of Realtors Pending Home Sales Index increased 1.7% for January, reaching its highest level in 18 months and marking the fifth consecutive month of year-over-year gains.
Jason Walls
Mon, 02 Mar 2015
Mon, 02 Mar 2015
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Euro dips to decade-long low against greenback
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