The Dollar surged in today’s trading as there were mounting concerns about Greece’s debt problems and an interest rate hike by India caused a sell-off of commodities. US equities were lower as well pressuring higher-yielders and commodity-linked currencies. The drop in US stocks and commodities is a symptom on increased risk aversion.
Greece Uncertainty Pressures Euro
The Euro was pressured today as investors remain anxious ahead of the European Union summit on March 25th as it remains unclear wethere EU leaders will provide financial aid to Greece, which is facing more than €20 billion in bond refinancing in the next two months. The unclear intentions and conflicting reports from officials in Germany and France have only intesified the lack of confidence in the situation.
That has pushed the EUR/USD pair down to 1.35 as of 12 PM EDT.
India Reserve Bank Hike Weakens Commodities and Commodity Currencies
A rate hike by Indea means that the country’s central bank fears that the country may be overheating and has decided to up its key lending rate to 5% and the reverse repuchast rate, or the borrowing rate, to 3.50%. The move was unscheduled and is an attempt by the central bank to anchor inflationary expectations.
The delcline in commodity prices following the India Reserve Bank decision weakend the Australian, New Zealand and Canadian Dollars, the commodity bloc of currencies.
