Dollar Rises In A Safety Run - 27.6.2011

US Dollar US dollar strengthened against its major peers, gaining ground for the fourth day against the euro, British pound, Australian dollar, Canadian dollar and even Japanese yen as concerns over European debt crisis boosted demand for the world’s reserve currency. At the same time 10-year US Treasuries yield fell to the lowest since November 2010 – 2.87%. However US economy does not show strong recovery with interest rates remaining at a record low to support the economy. US personal spending may have risen by only 0.1% in May, economists say before a report today, after a 0.4% gain in April. The data is expected to be week later this week, including manufacturing and construction reports. Euro The euro remains under pressure ahead of the key parliamentary vote in Greece on a new austerity program in conditions of a national strike and mass protests. A parliamentary approval would earn Greece another injection of international bailout, while a failure could leave Greece headed for bankruptcy within weeks and trigger financial turmoil with incalculable consequences for the whole euro currency area. Later on July 3 European finance authorities will decide whether Greece has met conditions for its next aid payment. The single currency fell from 1.4441 last Wednesday to 1.4102 today. At the same time international investors still support Greece as well as the euro area as a whole. Chinese premier Wen said in an interview that "China has actually increased the purchase of government bonds of some European countries, and we haven’t cut back on our euro holdings showing our confidence in the economies of Europe and the euro-zone." German authorities also expressed confidence last Friday, that banks and insurers will recognize their "very high interest" in sharing the burden of a Greek financial package and an agreement will be reached in the next nine days. Finally French banks said they are willing to partly roll over maturing Greek government bonds in a bid to avoid a default by the debt-laden nation, according to Bloomberg news, citing people familiar with the case. British Pound British pound continued today its four-day drop against the dollar, touching the lowest since January 2011 at 1.5913, amid speculation the Bank of England will keep interest rates low to counter faltering growth. The pound also weakened after Bank of England Governor King said last week the euro-area debt crisis poses the biggest risk to the stability of the UK financial system. This week reports may show nationwide house prices in the UK fell by 1.3% from a year earlier and gross domestic product increased by 0.5% in the first quarter and by 1.8% in annual figures.