Dubai:
Euro may extend its gaining streak this week after Greece sealed a deal with Euro-area countries last week, even as traders eye the United States Federal Reserve chair’s speech on Tuesday.
The agreement, in which Eurozone ministers agreed to extend Greece’s financial rescue package by four months, removed the uncertainty in the markets, and threat that Greece would run out of money in a few weeks and eventually force its way out of the Eurozone.
The euro rallied to a session high of $1.1428 (Dh4.78), before ending 0.11 per cent higher at 1.1381 against the dollar.
“With Greece news there is still a potential for a further rebound in euro. Though my analysis is that we have postponed a potential problem and not solved it,” said Pradeep Unni, senior relationship manager with Richcomm Global.
“Market would be looking at any clarification or thoughts in addition to what we saw in Fed minutes on the timing of a policy change,” said Unni.
Minutes to the Fed’s latest policy-setting meeting suggested to some analysts that policymakers might be backing off a June rate rise. But the strongest set of jobs data in many years were published after that late January Fed meeting took place.
Signs of converging negotiations between Greece and its European partners supported market sentiment. If confirmed, easing brinkmanship in Europe would add to the positive streak of global policy news, including this week’s surprise interest rate cut in Indonesia. Moreover, investors have taken solace from the stabilisation in oil prices and activity data outside the United States, said Bank of America Merrill Lynch in a note to its clients.
Strong equities
“The mood has improved a lot after days of uncertainty. International markets would like the Greece deal and we had a strong close on Friday. We would expect European and Asian equity markets to benefit from it this week,” said Henin, adding “we are not out of danger, but the risks have reduced at least in the short-term.”
On Friday, the Dow Jones Industrial Average ended 0.86 per cent at a record high of 18,140.44. The S&P 500 Index ended 0.61 per cent higher at 2,110.30., after hitting a record of 2,110.61.
The EURO STOXX 50 price ended 0.07 per cent higher at 3,490.53, while FTSE all-share index ended 0.38 per cent higher at 3,724.45.
Indian budget
Indian markets would eye the federal budget on Saturday after the benchmark Sensex snapped a seven day gaining streak on Friday.
The benchmark BSE Sensex ended 0.78 per cent lower at 29,231.41, paring the weeks gains to 0.5 per cent.
“There is a lot of euphoria after the recent debacle of the ruling Bharitya Janata Party in Delhi elections, which was seen as a wake up call. So the expectations are building on that front, it depends if the finance minister would be able to deliver in giving out a corporate and people-friendly budget,” said Unni.
The BJP-led government would present its first full year budget on February 28, the first litmus test for the new government to deliver on promises made during the elections. Markets will remain open on Saturday, the regulator said last week.
