Unacceptable Greek Bonds Could Be Euro’s Next Demon

The US Dollar has had another good day by forcing the EURUSD down to its present value of 1.4270 and the USDYEN to highs of 91.20. The greenback gained support from traders taking profits before the year end as well as the market perceiving that a stronger US recovery could warrant higher US interest rates in 2010.

The Euro continues to struggle with the Greek debt problem as European officials stated today that Greece was on its own in resolving its fiscal difficulties. In addition, there is much speculation that Moody will shortly downgrade Greece’s credit rating further to BAA1. This action could have significant consequences for Greek bonds as they may no longer be accepted by the ECB according to pre-crisis rules.

The GBPUSD fell to lows of 1.6040 during Monday after the Confederation of British Industry (CBI) raised their GBP forecast to 1.2% from 0.9% for 2010. In addition, they also predict that the Bank of England will raise the Bank Rate to 2% during next year.