Dollar gains on euro as Greek stocks plunge

[NEW YORK] The dollar gained on the euro on Monday after a big drop in the Greek stock market revived worries about Greece's place in the eurozone.

Greece's stock exchange, resuming trade after a five-week shutdown, immediately plunged around 20 per cent at the open before finishing down 16.23 per cent in the biggest single-day drop ever.

The turbulent restart to the Greek market "brought on fears the country was about to be dumped from the euro," said Robert Wojczak, corporate risk manager at Western Union Business Solutions.

"While most investors were expecting a massive sell-off, the loss of nearly a quarter of the listed companies' market value highlighted the extent to which the nation has been hit by the debt crisis and the fact that Greece will likely require EU lifelines for the foreseeable future," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

Analysts are also girding for a heavy week of US economic indicators. Data on Monday showed slightly weaker manufacturing activity and a modest gain in consumer spending.

The most eagerly anticipated release is Friday's jobs report for July, which could strengthen confidence the Federal Reserve will soon raise interest rates, perhaps even in September.

Many analysts expect the US economy added around 225,000 jobs in July, said BK Asset Management analyst Kathy Lien.

"As long as there aren't significant misses in any of the underlying components, which includes an increase in average hourly earnings, the dollar could hold onto its gains," Lien said in a client note.

"However if wage growth slows, the unemployment rate rises or payrolls increase by less than 200K, then the greenback is in trouble."

AFP