The euro appreciated against the majority of its peers as the European Central Bank signaled its approval of Greek bond rollovers and equities advanced for the first time in a week. The Standard & Poor’s 500 Index rose 0.5%, snapping four consecutive days of losses. The MSCI World (MXWO) Index gained 0.4%.
ECB President Jean-Claude Trichet yesterday gave his first signal that he endorses encouraging investors to buy new Greek bonds to replace maturing securities, potentially making the debt situation more sustainable.
A debt rollover is being considered as an alternative means of easing Greece’s funding squeeze, two officials familiar with the matter said last week on condition of anonymity. Investors may be given preferred status, higher coupon payments or collateral as incentives to roll over the holdings when they mature, two separate officials, who declined to be identified because the talks are in progress, said last week.
“The market is taking it pretty much for granted that Greece will get sufficient funds to tide it through the next couple of years,” said Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York.
The Swiss franc weakened against all major counterparts as data showed consumer prices were steady last month, damping speculation that the nation’s central bank will raise borrowing costs.
The franc weakened for the first time in three days versus the euro. Consumer-price inflation in May was unchanged from a month earlier, the Federal Statistics Office in Neuchatel said today. Prices rose 0.4 percent from a year earlier. Economists’ median estimate was for a monthly decline of 0.1 percent. The franc reached a record against the dollar before declining.
“The CPI data won’t spook the Swiss National Bank, which remains relatively dovish,” said Chris Walker, a foreign- exchange strategist at UBS AG in London. “The SNB doesn’t want to give any more incentive to buy the franc. They’re still worried about the level of the franc, which is mainly driven by external factors, such as risk appetite.”
The Swiss currency has strengthened amid concern that the European sovereign-debt crisis will deteriorate, spurring investor demand for a haven.