Oxford, MS 9/19/2011 (PennyPayDay) – The euro was under renewed pressure versus the dollar on Monday, giving back most of last week's gains amid concerns that Greece will inevitably default on its sovereign debt obligations.After stepping up with billions to backstop Greek debt earlier this year, European leaders have grown frustrated with the slow pace of structural reforms and budget cuts in Athens.
A meeting of Euro zone finance ministers in Poland on Friday and Saturday produced little support for Greece. Unless Greece takes more drastic measures, it may not receive its next payment from a bailout fund set up earlier this year, the EcoFin ministers warned.
Greek PM George Papandreaou is set to hold discussions with euro zone officials and the International Monetary Fund to break the impasse.
Construction output in the euro area increased from last year in July, after falling in the previous month, latest data released by Eurostat showed Monday.
Stocks tumbled in global markets this morning, giving the safe haven dollar an added boost.
The euro slipped to $1.3640 versus the dollar, edging near a 7-month low of $1.3494 set September 11. The Federal Reserve as it makes its latest interest rate decision on Wednesday.
Most economists rule out a wider QE III announcement, but anticipate the Fed will buy longer-dated Treasury bonds in an effort to drive down interest rates.
Fiscal deficit reduction proposals will be unveiled by President Obama later today. The plans for saving over $3 trillion over the next decade are likely to include measures to raise taxes on the rich.
The euro was stuck near GBP 0.87 versus the sterling, and was virtually unchanged at CHF 1.2060 versus Swiss franc.
The single currency slipped to a weekly low of Y104.50 versus the yen, near a 10-year low of Y103.88 set earlier this month.
Construction production increased 1.2 percent year-on-year in July, recovering from a revised 11.5 percent decrease recorded in June.
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