Euro Steadies As IMF Chides Greece

The euro gained on the broadly weaker sterling as the International
Monetary Fund warned Greece it will need to make deeper budget cuts in
exchange for further aid.

The IMF, with its leader Dominique Strauss-Kahn in jail in New York on
*** assault charges, is urging Athens to adopt new reforms in the
coming months. Greece is desperate to avoid restructuring its sovereign
debt, and will need help from neighbors and the IMF.

A lack of consensus on the Greece crisis has hurt the euro in recent
weeks, but its losses versus the dollar have been muted by a series of
economic releases showing lingering weakness in the U.S. economy.

The euro was stuck near $1.42 versus the dollar today, unable to
sustain a move back toward 17-month highs set earlier in May. The euro
topped out near $1.50 a few weeks ago.


In news from the beleaguered U.S. housing front, mortgage applications
continued to rise last week, as home owners rushed to lock in low
interest rates.

U.S. mortgage applications increased 7.8 percent from one week
earlier, according to data from the Mortgage Bankers Association's
Weekly Mortgage Applications Survey for the week ending May 13, 2011.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.60 percent from 4.67 percent.

The Federal Reserve is scheduled to release the minutes of the April
26-27 monetary policy setting meeting at 2 pm ET. The FOMC minutes are
also likely to be combed through to get further insights into the Fed's
thinking about economic conditions and its monetary policy stance.

Meanwhile, the euro rose to a 10-day high of GBP 0.8824 versus the sterling.

The number of Britons claiming jobless allowance increased in April at
the sharpest pace since January last year, even as the UK's private
sector struggled to compensate for job losses in the public sector due
to government spending cuts.

The Bank of England's rate-setting body decided by a split vote to
leave the key interest rate unchanged this month as concerns over
consumer spending overshadowed mounting inflation, the minutes of the
meeting revealed Wednesday.

On the flip side, the Eurozone economy no longer needs the degree of
economic or monetary stimulus adopted during the height of the financial
crisis, given the strong ongoing recovery of the region, European
Central Bank (ECB) Executive Board member Jurgen Stark said Wednesday.

(Market News Provided by RTTNews)