Volatility Climbs With Dollar as Germany Douses Greek Optimism
(Bloomberg) -- Currency volatility increased along with the dollar as Germany and Greece head for a showdown that is spurring traders to take out insurance against euro losses.
The premium to protect against a decline in the euro versus the greenback rose to the highest since Jan. 23 -- the day after the European Central Bank announced it would buy sovereign bonds -- before Greece's official creditors hold an emergency meeting. A gauge of the dollar closed at its highest level in data going back to 2004 as comments from regional Federal Reserve presidents suggested policy makers may raise interest rates by mid-year.
"The outcome of the Greek bailout saga is highly uncertain," said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. "You'll get pre-positioning and repositioning after the event, depending on whether it's a positive or negative surprise. It might cause some volatility," and that would support dollar buying, he said.
Shifting goal posts on employment may signal slower Fed rate hikes
(Reuters) - Federal Reserve officials are debating a historic shift in one of its core economic gauges that could lead the central bank to move even slower than now thought once it lifts its rates from rock bottom levels.
According to interviews with half a dozen current and former Fed policymakers and staff, the concept that the economy can produce far lower levels of unemployment without stoking inflation is being built into Fed models and becoming increasingly entrenched in the central bank's views.
That shift may not delay the timing of the Fed's first rate increase, still expected in mid-year. But it does offer Chair Janet Yellen a good reason to move at a snail's pace from then on to bring as many people as possible back to work and to push inflation back up to the Fed's 2-percent target.
Greece's Varoufakis says Greece needs debt haircut: magazine
(Reuters) - Greece's finance minister said Greece would not be able to service its debt in the short-term so would need a haircut, or debt restructuring, he told Germany's Stern magazine.
"If a debt can no longer be paid off then that leads to a haircut," Yanis Varoufakis said in a pre-publication copy of the interview made available on Wednesday.
"What is critical is that Greece's debt cannot be paid off in the near future," he said.