Euro Zone Industrial Output Rises
Strong euro zone economic data prompted euro gains in global currency markets. Euro zone industrial production figures showed the biggest monthly industrial output on record in January. Some currency experts expected the move and Nick Bennenbroek of Wells Fargo in New York stated, “What we’re seeing here is probably corrective strength in the euro and sterling. We had very large positions in these currencies so they are due to bounce anyway. And we got some positive news on these currencies, which was a convenient excuse for these to gain.” The pound gained for the second straight day vs. the US dollar after a report showed that UK house prices gained at the fastest rate in seven years. Home prices in Wales and England rose 1.9% in February the largest increase since 2002. Election concerns are still putting the pound under pressure as investors fear government gridlock in the UK.
Pound Gains on UK Housing Data
Many experts believe that the UK could have its first minority government since 1974 which could hamper the nation’s ability to address economic concerns. The pound gained 0.8% vs. the US dollar trading at $1.5184. Prime Minister Gordon Brown said that this years UK budget will be delivered on March 24th and called recovery in the UK ‘fragile.’ Bank of England Chief Economist Spencer Dale said that the Bank of England’s 200 billion pound ($303 billion USD) bond purchase program is starting to yield results. In a speech at Cambridge Dale said, “There are perhaps some tentative signs that nominal spending in our economy is starting to accelerate. Much of the impact of our asset purchases to date is still to come through and so it is too early to judge their final impact.”
EU Nations Will Aid Greece
The euro gained after a report by the French newspaper Le Monde that said that EU nations will offer Greece and aid package of 20 billion to 25 billion euros, ($27.56-$34.45 billion USD) Le Monde reported that meetings took place in Brussels with the goal of reaching a compromise regarding aid to Greece. The report said finance ministers had to choose between a loan facility financed by euro zone nations or a facility financed by EU member states and guaranteed by EU member states. The facilities can only be used if needed and Le Monde noted that Greece faces more debt refinancing in April and May. A meeting between the European Central Bank and the European Commission will take place Friday. Economic and Monetary Affairs Commissioner Olli Rehn pointed out that the EU could lose credibility if Greece defaults.
