By: Barbara Zigah
Ahead of the opening of the March European Union Economic Summit, the common currency Euro is continuing to hold its own against the U.S. Dollar in Tokyo trading. Supporting the Euro, as the month draws to a close, is investor speculation that the European Central Bank will follow through on its promise of an interest rate hike by the April policy setting meeting. As reported at 2:50 p.m. (JST) in Tokyo, the Euro was trading against the greenback at $1.4184, up from yesterday’s late trade in New York of $1.4177 on the EBS platform.
Portugal’s problems grew as another credit ratings agency downgraded sovereign debt from A- to BBB, though most analysts acknowledge that the markets were expecting the downgrade. Most traders and analysts strongly believe that Portugal will request bail-out assistance, which in itself is helping to support the Euro. Very few traders see Portugal as continuing to be a significant factor in EUR/USD volatility.
With the opening of the E.U. summit, traders will be keen to learn the details of the bailout mechanism that is expected to provide resolution to the contagion problem. The primary worry is that the Eurozone’s fiscal crisis could spread to Spain, which is critical to the E.U. economy as a whole.