Euro Slumps Against Dollar as Greek GDP Raises Concerns
Euro leaders announced today that they were pushing back a meeting to discuss a new Greek aid package to Monday and instead discussing the situation by telephone on Wednesday. Compounding this news was the latest GDP number from Greece, which showed a fourth quarter contraction of 7.0%, missing estimates of only a 5.5%-6.0% contraction. Investors were expecting big things to come out of the leaders’ meeting, which was scheduled Wednesday, February 15. The delay was especially worrying for investors, as a Greek €14.5 billion bond redemption repayment is due on March 20th, and an aid package must be in place before then.
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The Dollar rallied against the Euro, as investors sought safer havens to protect from a potential debt default by Greece. If Eurozone leaders continue to push back meeting and the approval of a Greek aid package, the country will almost certainly default within the next couple months. Even the slight risk of this happening has investors running for safety in the dollar, which is seen to be the best hedge against the problems in Europe
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