Fears that Greece would exit the eurozone and that the crisis is spreading to Spain hammered the loonie, as the Canadian currency is usually nicknamed. Domestic fundamentals were actually good for the currency. Manufacturing sales climbed 1.9 percent in March and consumer price inflation was 0.4 percent in April. Economists believe that Canada would the first country from the Group of Eight to raise its interest rates. The loonie is likely to strengthen then, but for now the currency remains depressed.

The Canadian dollar posted losses against the greenback each day of this week. The currency was flat one day against the yen, but otherwise the trend was the same straight way down. The loonie fell even the euro and the Australian dollar, which were also weakened by risk aversion, though its moves were less straightforward versus these currencies.

USD/CAD surged from 1.0001 to 1.0221 this week, posting the highest weekly close since January. CAD/JPY sank from 79.93 to 77.25, also the lowest since January. EUR/CAD advanced from 1.2901 to 1.3060, following the drop to 1.2781 — the lowest level since January 2011. AUD/CAD climbed from 1.0012 to 1.0059 during the week.

If you have any questions, comments or opinions regarding the Canadian Dollar,
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Article source: http://www.topforexnews.com/2012/05/19/bad-week-for-loonie-in-spite-of-some-good-news/

WASHINGTON, May 20 (Reuters) – If or when policymakers finally decide Greece should leave the euro, the exit could happen so quickly that ‘new drachma’ currency notes might not be printed in time.

In principle, some of the long-term consequences of Athens leaving the currency bloc are not unappealing. The euro zone would no longer have to worry about what has always been its weakest link. While a new Greek currency would almost certainly immediately crash in value as soon as it was issued, in doing so it would make the Greek economy much more competitive.

But the short-term effects would be brutal, both domestically and on the global economy. A post-euro Greece could find itself struggling to import food and fuel, with everyday life reduced to barter in goods and services and the government unable to pay workers in anything they would want to receive.

‘It would be chaos,’ says Marios Efthymiopoulos, a visiting scholar at Johns Hopkins University Centre for Advanced International Studies and president of Thessaloniki-based think tank Global Strategy.

‘The banks would collapse and you would have to nationalise them. You wouldn’t be able to pay anyone except in coupons. There is only one (currency) printing press in Greece. It is in the museum in Athens and it doesn’t work any more.’

The cost of managing what is increasingly being termed ‘Grexit’ – with its resulting global market turmoil and colossal financial pressure on Spain and Italy – could dwarf the cost of keeping Greece on financial life support. But with northern European states – and their electorates – becoming tired of bailouts, the probability is seen clearly on the rise.

World leaders meeting at the G8 at Camp David recommitted themselves to keeping Greece in the euro zone, underlining worries over the costs of an exit. Not everyone believes that will prove enough. The unknowns, however, are enormous.

‘There’s so much we don’t know,’ says Domenico Lombardi, a senior fellow specialising in the global economy at the Brookings Institution. ‘If Greece leaves the euro, it will also have to leave the EU,’ he added, though some suggest treaties may be interpreted or amended to keep Athens in the wider bloc.

Lombardi questioned how much help Greece could count on: ‘How much international support is there? Probably not very much. It’s very hard to know what they could practically do.’

With life for the Greek people changing overnight with a euro exit, social turmoil would be inevitable. Whoever made the decision – if it were to be made in Athens at all – could certainly not count on being in power weeks or even days later.

‘It would be truly revolutionary, in every sense of the word,’ says Tyson Barker, head of transatlantic relations at the Bertelsmann Foundation. ‘There are various ways it could be done … but you could end up like Cuba with use of multiple currencies or with essentially a barter economy, at least in the early days.’

Private companies and foreign states, including Britain and the United States, have detailed contingency plans for euro zone collapse. Greece, however, is in a more delicate position.

Had it become public knowledge that any Greek government was

preparing to leave, the resulting panic could easily have made it a self-fulfilling prophecy.

Already this week, Greek savers – and smaller numbers elsewhere in the southern euro zone – have begun to take money from banks. Tourists are staying away, exporters are demanding cash up front.

Should Grexit ever happen, it would have to begin within days or even hours of the decision being made at the top.

WALKING OUT OR KICKED OUT?

But just as it increasingly appears incapable of pushing through the tough austerity measures and reforms required by international lenders under the terms of existing bailouts, Athens might prove simply unable to take the decision to leave. Almost without exception, its political leaders have pledged to remain in the single currency even if they opposed the bailouts.

In theory, there is no provision under EU treaties for Europe’s other states to unilaterally kick out a member. But in reality, analysts and officials say they could effectively freeze Greece out by closing its access to European Central Bank lending.

That might effectively force Greece to issue its own currency as it might not have any other way of paying workers or providing enough cash to keep the economy moving.

At that stage, Greece would likely also attempt to convert all local and perhaps also its international debt into the new and rapidly depreciating currency. Its international creditors, however, would cry foul. That would likely be the beginning of a debt restructuring that could last years. But historic debts would be the least of Greece’s immediate problems.

Even the physical production of a new currency would be fraught with problems. Any foreign firm hired to print Greek notes would almost certainly require money up front. Any coupons or temporary notes produced locally might swiftly be forged, rendering them even more worthless.

As in some other non-euro zone states such as Montenegro, the euro might remain the principal currency for many transactions. But it would be in much shorter supply and be beyond government control or even influence, making it almost impossible to use for salaries or benefits payments.

Euro savings held in Greek banks would inevitably be redenominated in the new currency — with its rapidly slumping value. Physical euro notes already in circulation, however, would retain their value or even become much more prized.

BORDER CLOSURES, TROOPS ON STREETS?

It would most likely be necessary to close borders to stop Greeks smuggling out euros to stash in banks elsewhere. But with hundreds of miles to cover, much of it in inaccessible mountain, wood and scrubland, security forces would be stretched thin.

Simultaneously, police would likely have to manage a dramatic spike in unrest and perhaps more political and criminal violence. Already, there have been isolated examples of Germans — or those suspected of being German — being assaulted in apparent anger over EU-enforced austerity.

Greece’s leaders could decide to deploy the army onto the streets in an attempt to reassure the population and bring calm. But that could prove deeply divisive.

‘If this happens, there are definitely going to be security incidents in the streets of Athens,’ says David Lea, Western Europe analyst at Control Risks. ‘But the Greek military is not designed to deal with this. It’s designed to deter Turkey. And you have to remember, this is a country with a recent history of military dictatorship and using it could go down very badly.’

Rarely would a country have needed international financial aid so desperately. But euro zone countries would likely want to preserve their financial resources to protect other states, particularly Italy and Spain, and might even push the IMF to hold back. In a tightly fought U.S. election year, financial aid from the United States would also be virtually unthinkable.

Greece could try to turn elsewhere. In 2008, Iceland raised eyebrows amongst other NATO members when it approached Russia for a massive financial loan that many suspected would come with strategic strings attached, perhaps rights to use military bases on the island. But neither Moscow nor Beijing are seen particularly keen to take on Athens’s woes.

In easier times, it might have been possible to extricate Greece quietly and slowly. Dozens of countries have successfully left currency blocs since 1945, mainly colonial states breaking free of their former masters. But doing it under this much pressure and global market focus makes that impossible.

‘An exit is technically feasible,’ said Lea at Control Risks. ‘But managerially, it is extremely difficult to do well. It requires a lot of planning and a lot of agreement. And given current circumstances, there is no chance of that.’

(Editing by Giles Elgood) Keywords: GREECE NEWDRACHMA

(peter.apps@thomsonreuters.com)

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‘Euro zone countries must either stand behind their currency or face up to the prospect of Greek exit, with all the risks that could involve.

‘How can they stand behind the euro? First, those countries with high deficits and low competitiveness need to carry on confronting their problems head on. But in the absence of flexible exchange rates the economic and political barriers to dealing with those problems will only get worse without more support from the core of the euro zone,’ Osborne said.

He said the euro zone must follow ‘the remorseless logic’ of monetary union towards greater fiscal integration and ‘burden-sharing’, with eurobonds one possible option.

(Reporting by Olesya Dmitracova; Editing by Louise Ireland) Keywords: EUROZONE BRITAIN/

(olesya.dmitracova@thomsonreuters.com)(+44 20 7542 8051)(Reuters Messaging: olesya.dmitracova.thomsonreuters.com@reuters.net)

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XE Forex Rates

 
USD
EUR
GBP

1 USD =

1.00000

0.78230

0.63217
Inverse:
1.00000
1.27828
1.58185

1 EUR =

1.27828

1.00000

0.80809
Inverse:
0.78230
1.00000
1.23748

1 GBP =

1.58185

1.23748

1.00000
Inverse:
0.63217
0.80809
1.00000

1 JPY =

0.01266

0.00990

0.00800
Inverse:
79.02000
101.00984
124.99779

1 CAD =

0.97804

0.76512

0.61829
Inverse:
1.02245
1.30698
1.61736

1 AUD =

0.98470

0.77033

0.62250
Inverse:
1.01554
1.29814
1.60643

1 CHF =

1.06349

0.83197

0.67231
Inverse:
0.94030
1.20197
1.48741

1 RUB =

0.03198

0.02502

0.02021
Inverse:
31.27300
39.97571
49.46920

1 CNY =

0.15808

0.12367

0.09993
Inverse:
6.32590
8.08628
10.00662

1 ZAR =

0.11978

0.09370

0.07572
Inverse:
8.34877
10.67208
13.20650

1 MXN =

0.07241

0.05664

0.04577
Inverse:
13.81100
17.65435
21.84693

Article source: http://www.xe.com/news/2012/05/20/2678857.htm?utm_source=RSS&utm_medium=TL&utm_content=NOGEO&utm_campaign=News_RSS_Art1

Fears that Greece would exit the eurozone and that the crisis is spreading to Spain hammered the loonie, as the Canadian currency is usually nicknamed. Domestic fundamentals were actually good for the currency. Manufacturing sales climbed 1.9 percent in March and consumer price inflation was 0.4 percent in April. Economists believe that Canada would the first country from the Group of Eight to raise its interest rates. The loonie is likely to strengthen then, but for now the currency remains depressed.

The Canadian dollar posted losses against the greenback each day of this week. The currency was flat one day against the yen, but otherwise the trend was the same straight way down. The loonie fell even the euro and the Australian dollar, which were also weakened by risk aversion, though its moves were less straightforward versus these currencies.

USD/CAD surged from 1.0001 to 1.0221 this week, posting the highest weekly close since January. CAD/JPY sank from 79.93 to 77.25, also the lowest since January. EUR/CAD advanced from 1.2901 to 1.3060, following the drop to 1.2781 — the lowest level since January 2011. AUD/CAD climbed from 1.0012 to 1.0059 during the week.

If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.

XE Forex Rates

 
USD
EUR
GBP

1 USD =

1.00000

0.78230

0.63217
Inverse:
1.00000
1.27828
1.58185

1 EUR =

1.27828

1.00000

0.80809
Inverse:
0.78230
1.00000
1.23748

1 GBP =

1.58185

1.23748

1.00000
Inverse:
0.63217
0.80809
1.00000

1 JPY =

0.01266

0.00990

0.00800
Inverse:
79.02000
101.00984
124.99779

1 CAD =

0.97804

0.76512

0.61829
Inverse:
1.02245
1.30698
1.61736

1 AUD =

0.98425

0.76998

0.62221
Inverse:
1.01600
1.29874
1.60716

1 CHF =

1.06349

0.83197

0.67231
Inverse:
0.94030
1.20197
1.48741

1 RUB =

0.03198

0.02502

0.02021
Inverse:
31.27300
39.97571
49.46920

1 CNY =

0.15801

0.12361

0.09989
Inverse:
6.32890
8.09012
10.01137

1 ZAR =

0.11978

0.09370

0.07572
Inverse:
8.34877
10.67208
13.20650

1 MXN =

0.07241

0.05664

0.04577
Inverse:
13.81100
17.65435
21.84693

Article source: http://www.xe.com/news/2012/05/19/2678717.htm?utm_source=RSS&utm_medium=TL&utm_content=NOGEO&utm_campaign=News_RSS_Art3

Alberto had top sustained winds of 45 miles per hour (75 kph) and was in the Atlantic about 140 miles (225 km) east-southeast of Charleston. It was moving slowly southwest and forecasters said a storm watch might be posted later on Saturday for part of the North and South Carolina coast.

(Reporting By Jane Sutton; Editing by Peter Cooney) Keywords: STORM ALBERTO/

(jane.sutton@thomsonreuters.com)(+1 305 810-2688)

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The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

Article source: http://www.xe.com/news/2012/05/19/2678721.htm?utm_source=RSS&utm_medium=TL&utm_content=NOGEO&utm_campaign=News_RSS_Art2

MIAMI, May 19 (Reuters) – Tropical Storm Alberto formed off the South Carolina coast on Saturday, bringing an early start to the Atlantic hurricane season, forecasters at the U.S. National Hurricane Center said.

Alberto had top sustained winds of 45 miles per hour (75 kph) and was in the Atlantic about 140 miles (225 km) east-southeast of Charleston.

It was moving slowly southwest and forecasters said a storm watch might be posted later on Saturday for coastal North and South Carolina. Only moderate strengthening was expected.

Alberto was forecast to make a slow loop during the next few days and then turn northeast, making its way along the U.S. mid-Atlantic seaboard before dissipating in about five days.

That would keep it well away from the Gulf of Mexico, where U.S. oil and gas operations are clustered, but could bring squalls and rough surf to the Carolina coast.

The Atlantic hurricane season officially runs from June 1 to Nov. 30, but storms outside that time frame are not uncommon. Alberto was the earliest-forming Atlantic storm since 2003, when Tropical Storm Ana formed more than five weeks before the official start of the season, the hurricane center said.

(Reporting By Jane Sutton; Editing by Peter Cooney) Keywords: STORM ALBERTO/

(jane.sutton@thomsonreuters.com)(+1 305 810-2688)

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The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

Article source: http://www.xe.com/news/2012/05/19/2678725.htm?utm_source=RSS&utm_medium=TL&utm_content=NOGEO&utm_campaign=News_RSS_Art1