Dollar Will Continue To Strengthen vs. Euro Analysts Say

Many currency experts believe the US dollar will continue to strengthen against the euro as worries about the Greek debt crisis continue. The U.S. non-farm payrolls report for March is due this week and is expected to show that 168,000 new jobs were created and an unchanged unemployment rate. Analysts say that signs of economic improvement in the US could further support the greenback. A deal between the EU and the IMF to provide aid to debt ridden Greece has prevented a euro freefall but euro sentiment remains negative.  John McCarthy of ING stated, “Although we have this agreement on a Greece aid package, it is somewhat unclear as to whether it is going to be applied, when is it going to be applied…and the fact is Greece still has considerable debt. What’s to say that we will not go through this again with Greece or Portugal. This is not going away in the immediate future.” Some experts believe that the euro is in a long term downtrend similar to the US dollar’s seven year decline in advance of the global recession.

Experts optimistic About US Jobs Report

Aside from the continuing Greek concerns among investors most investors will be focused on the US employment report which is expected to show that the worst of the recession may be over. A research note from Danske Bank said, “Although the February data continued to print job losses, there are several signs the March U.S. payroll report is a very likely candidate for a significant upside surprise. This would overcome some of the skepticism about the current job market recovery.” Two other reports are due this coming week, the U.S. Institute Supply for Management report and the Chicago manufacturing survey. Both are expected to show that the US economy is recovering.

IMF Role in Greece’s Rescue Unclear

At last week’s EU summit European leaders agreed to provide loans to Greece with the IMF’s help. IMF officials were unclear on how IMF funds would be accesses and how it could impose the conditions that usually come with IMF aid. The IMF issued a statement saying, “We are following developments closely, And as we have said earlier, the Fund always stands ready to consider a request from a member country for our financial assistance.” The EU has indicated that they would provide two thirds of the funding for Greece and the IMF would provide the other third. Last Thursday Greek Finance Minister George Papaconstantinou said that Greece would prefer to obtain finds through financial markets but that will depend on interest rates.