Euro Gains as Greek Parliament Approves Bailout - 21.3.2012

US Dollar The dollar fell toward its almost two-week low, according to the currency’s index – the measure dropped to 79.41 in Asian trading hours today. Today the data from the US may show that existing home sales rose in February to an almost two-year high. According to preliminary estimations, sales increased by 0.8%, following a 4.3% jump in the prior month. Yesterday the Federal Reserve Bank of Minneapolis President Narayana Kocherlakota noted in a speech the encouraging improvement in the US economy, but mentioned that monetary policy may achieve only limited success in terms of employment. “Monetary and non-monetary policy must work in concert to reduce the impact of a decline in labor demand. Neither can do it alone,” he said. Kocherlakota also rejected the need for “additional accommodation right now” and indicated the Fed may need to withdraw monetary stimulus in 2013 if the economy meets his forecast with inflation exceeding 2% in the next two years. Euro The euro extended gains versus the dollar, the yen and the British pound in Asian trading hours today. The single currency climbed to the highest since October 31 against the Japanese counterpart – 111.16 and to the highest since March 8 against the US peer – 1.3282. News from Greece were supportive for the euro early in the morning, saying that the Parliament formally approved the international aid package from the EU and IMF. Nevertheless some time ago the IMF warned in a report that the bailout program implies “exceptionally high” risks, suggesting that the nation may need to implement further measures in order to meet its obligations in terms of fiscal policy. British Pound The pound traded in a narrow range yesterday against the greenback, sliding slightly from a three-week high 1.5915. Yesterday reports showed that inflation in the UK slowed in February less than economists initially expected. The CPI rose by 3.4% in annual figures following a 3.6% gain in January. At the same time the core measure of inflation slowed down from 2.6% to 2.4%. In Asian trading hours the currency traded in a narrow range as well – 1.5859-1.5895 – before the Bank of England releases the minutes of the latest policy meeting and the annual budget is presented to the Parliament.