German firms increasingly worried about weak euro

Germany’s DIHK Chambers of Commerce said yesterday that while the weak euro would initially boost Europe’s largest economy by enabling exporters to offer their goods abroad for less, firms were increasingly concerned about the exchange rate.

“The strong exchange-rate fluctuations in recent months are making it difficult to develop long-term plans and increasing the cost of the hedging transactions they need to do,” the DIHK said.

Most firms in Germany have to import goods and these have become noticeably more expensive due to the weak euro, it said.

A DIHK survey earlier this year found that almost a fifth of German companies see the weak euro as a business risk, compared with 11% of firms in a poll in October.

While firms now pay around a third less for oil than they did six months ago, the weak euro exchange rate is counteracting some of those gains given that oil is priced in US dollars, the DIHK said.

“A weak exchange rate should not create the impression of greater competitiveness. A weak currency generally goes with a weaker economy,” it said.

“The devaluation of the euro is therefore also a sign that investors have more confidence in other countries’ dynamism, especially in the US.”

The DIHK also said there was a risk of competitive devaluation after several central banks around the world reduced their key interest rates and so stopped their currencies from appreciating more strongly. “That shows that competitive devaluation that seeks to boost your own export industry doesn’t achieve anything because other countries can always follow suit,” it said.

Reuters

German chambers of commerce fear weak euro could have negative effects

BERLIN (Reuters) – Germany’s DIHK Chambers of Commerce said on Thursday that while the weak euro would initially boost Europe’s largest economy by enabling exporters to offer their goods abroad for less, firms were increasingly concerned about the exchange rate.

“The strong exchange rate fluctuations in recent months are making it difficult to develop long-term plans and increasing the cost of the hedging transactions they need to do,” the DIHK said.

Most firms in Germany have to import goods and these have become noticeably more expensive due to the weak euro, the DIHK said.

A DIHK survey published in February found that almost a fifth of German companies see the weak euro as a business risk, compared with 11 percent of firms in a poll published in October, the DIHK said.

While firms now pay around a third less for oil than they did six months ago, the weak euro exchange rate is counteracting some of those gains given that oil is priced in U.S. dollars, the DIHK said.

“A weak exchange rate should not create the impression of greater competitiveness. A weak currency generally goes with a weaker economy,” the DIHK said.

“The devaluation of the euro is therefore also a sign that investors have more confidence in other countries’ dynamism, especially in the United States.”

The DIHK also said there was a risk of competitive devaluation after several central banks around the world reduced their key interest rates and so stopped their currencies from appreciating more strongly.

“That shows that competitive devaluation that seeks to boost your own export industry doesn’t achieve anything because other countries can always follow suit,” the DIHK said.

“On the contrary: in such competitions to get the weakest currency everybody loses out in the end.”

(Reporting by Michelle Martin; Editing by Susan Fenton)

Euro zone price fall slows as expected, deflation fears ease

By Jan Strupczewski

BRUSSELS (Reuters) – Euro zone consumer prices fell again in March, as expected, but the decline was the smallest this year, indicating the price of goods and services could start rising again soon.

Meanwhile, the region’s unemployment rate fell to its lowest in almost three years, a sign the economy is picking up steam and inflation is likely to rise.

Consumer prices in the 19 countries sharing the euro fell 0.1 percent year-on-year this month, the European Union’s statistics office Eurostat estimated. Prices fell 0.3 percent in February and 0.6 percent in January.

The bottoming out of price declines is likely to be welcome news for the European Central Bank, which wants to keep inflation below, but close to 2 percent over the medium term. It started printing money in March to inject more cash into the economy and ward off concerns of persistently falling prices, or deflation.

“Inflation will soon flatten out, and will turn clearly positive in the second half of the year,” said Nick Kounis, head macro and financial markets research at ABN AMR.

“The drag from energy will ease in the coming months, while food price inflation (now unusually weak) is likely to gradually edge up as it follows developments in agricultural prices with a long lag,” he said.

“Finally, later in the year – and more so in 2016 – the impact of the weaker euro will feed through. Overall, then we look to be in a world of ‘lowflation’ rather than ‘deflation’,” Kounis said.

As in previous months, the decline was mainly driven by a drop in the price of energy, which was 5.8 percent cheaper in March than a year earlier.

Core inflation, which excludes volatile energy and unprocessed food costs, was 0.6 percent year-on-year, down from 0.7 percent in February and the same as in January.

“The data will likely dilute fears that deflation could become entrenched in the euro zone with long-term debilitating growth effects,” said Howard Archer, economist at IHS Global Insight.

“In fact, it may not be long before the markets start seriously questioning whether the ECB will continue to fully enact its quantitative easing programme all the way through to September 2016,” Archer said.

In another positive sign for the euro zone economy, Eurostat said euro zone unemployment fell to 11.3 percent of the workforce in February from an upwardly revised 11.4 in January — the lowest rate since May 2012.

Eurostat said 18.204 million people were without jobs in the euro zone in February, 49,000 people fewer than a month earlier.

(Reporting By Jan Strupczewski; Editing by Philip Blenkinsop, Larry King)

Euro-Area Price Drop Slows as Draghi Implements QE Plan

(Bloomberg) — A slump in euro-area consumer prices eased in March, offering respite to the European Central Bank after it ramped up stimulus to fend off a deflation threat.

The annual rate of inflation in the 19-nation bloc climbed to minus 0.1 percent from minus 0.3 percent in February, the European Union’s statistics office in Luxembourg said on Tuesday. That’s the fourth consecutive reading below zero and in line with the median estimate in a Bloomberg survey. Unemployment fell to 11.3 percent in February from a revised 11.4 percent the previous month.

The Frankfurt-based ECB pledged to buy 1.1 trillion euros ($ 1.2 trillion) of assets including government bonds through September 2016 to fend off deflation. ECB President Mario Draghi, who pushed the program through against resistance from Germany, has already signaled that he expects victory and presented forecasts showing inflation back in line with the bank’s mandate of just below 2 percent in 2017.

More from Bloomberg.com: Italian Jobless Rate Rises in Setback for Renzi’s Government

“The inflation rate is set to rise again over the course of the year, mainly because oil prices will start increasing at some point as well,” said Marco Wagner, an economist at Commerzbank AG in Frankfurt. “The latest ECB measures might of course have an effect as well, but it’s probably minor.”

Bundesbank President Jens Weidmann, who opposed the program, has argued that consumer prices would pick up anyway as the drop in energy costs adds to previous ECB action in stimulating the economy.

Core Inflation

Core inflation in the euro area slowed to 0.6 percent in March from 0.7 percent, according to today’s report. Energy prices fell 5.8 percent after a 7.9 percent decline in February.

Economists surveyed by Bloomberg forecast euro-area consumer prices will remain unchanged this year before rising 1.2 percent in 2016. The ECB also projects stagnating prices for 2015 and sees inflation at 1.5 percent in 2016 and 1.8 percent in 2017.

More from Bloomberg.com: Europe Stocks Are Little Changed, Heading for Quarterly Advance

In Spain, where the inflation rate has been below zero for nine months, the slump in consumers prices moderated in March after hitting a record low of minus 1.5 percent in January. In Germany, the rate turned positive for the first time in three months as a recovery in the region’s largest economy gathers momentum.

To contact the reporter on this story: Stefan Riecher in Frankfurt at [email protected]

To contact the editors responsible for this story: Fergal O’Brien at [email protected] Jana Randow, Paul Gordon

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FOREX-Greece debt worries hurt euro, dollar rebounds

* Encouraging data mitigate worries about Greece debt talks

* Euro sets for biggest quarterly loss vs dollar since 1992

* Dollar index rebounds after two weeks of losses

* Yellen’s message supports view of U.S. gradual tightening (Updates late market action)

By Richard Leong

NEW YORK, March 30 (Reuters) – The euro slumped against the dollar on Monday on worries over whether Greece would secure aid before it runs out of cash in three weeks, while the greenback gained versus other currencies on the view the Federal Reserve will raise U.S. interest rates this year.

Athens sounded upbeat about talks with its creditors to release funds from its 240-billion-euro aid package while Germany called for a more detailed list of reforms.

Concerns about the negotiations were mitigated by encouraging European data. A report showed confidence in the euro zone economy rose to its highest since July 2011 and a positive reading on German inflation raised hopes the region would avert deflation.

The euro remains under pressure from the diverging policy paths of the Fed and the European Central Bank, supporting the notion it would fall to parity with the dollar this year, analysts said.

“That’s a pretty strong headwind for the euro,” said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.

The euro zone single currency was down 0.7 percent against the dollar at $ 1.0813. This brings its quarterly decline to 10.6 percent, which would be its largest since the fourth quarter of 1992.

The euro fared better versus the yen, up 0.2 percent at 129.94 yen.

The dollar rebounded following comments late Friday from Fed Chair Janet Yellen which underscored the view that the U.S. central bank is likely to start raising rates gradually later this year.

The dollar index, a gauge of the greenback’s value against a basket of currencies, climbed 0.8 percent at 98.054 after back-to-back weeks of losses.

The greenback was up 0.9 percent against the yen at 120.18 yen, while the sterling was down 0.6 percent against the dollar at $ 1.4796.

Domestic data on personal spending and pending home sales reinforced the view the U.S. economy would grow enough for the Fed to end its near-zero rate policy.

U.S. jobs data on Friday will be the key event this week. A robust report could see investors position for tighter monetary policy sooner rather than later.

Economists polled by Reuters forecast U.S. employers likely added 245,000 workers in March with the jobless rate holding at 5.5 percent..

(Additional reporting by Ahmed Aboulenein and Anirban Nag in London; Editing by Larry King, James Dalgleish and Christian Plumb)

Currencies: Dollar sees largest two-week decline against euro since 2012

NEW YORK (MarketWatch)—The U.S. dollar booked its largest two-week decline against the euro since September 2012 on Friday, sliding on expectations that the Federal Reserve will begin raising interest rates later, and more gradually, than market participants had previously anticipated.

The euro EURUSD, +0.04%  traded at $ 1.0886, compared with $ 1.0880 late Thursday. The dollar traded at 119.19 yen, compared with ¥119.19 level seen late Thursday.

The dollar lost about 3.7% against the euro over the last two weeks. That’s the largest percentage decline since the week ending on Sept. 14, 2012, shortly after the European Central Bank introduced its program of outright monetary transactions, which helped restore investors’ confidence in eurozone sovereign debt.

Still, the euro is down more than 10% versus the dollar since Dec. 31.

Federal Reserve Chairwoman Janet Yellen spoke at a conference hosted by the Federal Reserve Bank of San Francisco, but her words had little impact on the dollar. She reiterated the view, established at last week’s Fed policy meeting, that a rate hike would happen some time this year, and that the central bank is in no hurry to raise interest rates.

Read: Fed’s Yellen says rate hikes—but not too many—are coming

Earlier in the session, the Commerce Department released its final revision of fourth-quarter gross domestic product growth. It showed the U.S. economy grew 2.2% in the last three months of 2014, unchanged from the previous estimate. Economists polled by MarketWatch had expected 2.4% growth.

Many analysts had expected a moderation in fourth-quarter GDP growth after the annualized growth rate for the third quarter rose to 5%, the highest reading since the third quarter of 2003.

“Anyone who thought the U.S. economy was going to continue to pump out such outstanding figures was too ambitious,” Jameel Ahmad, chief market analyst at FXTM, said. Growth of “2.2% for a developed economy, this is still a very strong figure. If anything it points to the fact that the U.S. economy is continuing to tick along nicely.”

The U.S. economy saw strong readings on consumer-price inflation and new-home sales earlier in the week, but the durable-goods orders report, released on Wednesday, was seen supporting the notion of delayed rate hikes.

“Core durable goods orders have fallen for 5 months in a row, and hopes of a significant rebound in capital spending and fixed investment continue to fail to materialize,” said Kit Juckes, global strategist at Société Générale. “Add that to the lack of wage or consumer price pressures, and the arguments for an aggressive or protracted rate-hiking cycle remain absent.”

The ICE U.S. Dollar Index DXY, -0.03% which gauges the dollar’s strength against six major currencies, was down EURUSD, +0.04%  slightly at 97.39.

The pound GBPUSD, +0.22%  traded at $ 1.4907, compared with $ 1.4853 Thursday.

Project Syndicate: How far will the euro fall?

LONDON (Project Syndicate) — The U.S. dollar is hitting new 12-year highs almost daily DXY, -1.28%  , while the euro EURUSD, +1.50%  seems to be plunging inexorably to below dollar parity. Currency movements are often described as the most unpredictable of all financial variables. But recent events in foreign-exchange markets seem, for once, to have a fairly obvious explanation — one that almost all economists and policy makers accept and endorse.

French President François Hollande, for one, has ecstatically welcomed the plunging euro: “It makes things nice and clear: one euro equals a dollar,” he told an audience of industrialists. But it is when things seem “nice and clear” that investors should question conventional wisdom. A strong dollar and a weak euro is certainly the most popular bet of 2015. So is there a chance that the exchange-rate trend may already be overshooting?

Also read: The dollar’s meteoric rise may be just about over

In one sense, the conventional explanation of the recent euro-dollar movement is surely right. The main driving force clearly has been monetary divergence, with the Federal Reserve tightening policy and the European Central Bank maintaining rock-bottom interest rates and launching quantitative easing. But how much of this divergence is already priced in? The answer depends on how many people either are unaware of the interest-rate spread or do not believe that it will widen very far.

Last year, many investors questioned the ECB’s ability to launch a bond-buying program in the face of German opposition, and many others doubted the Fed’s willingness to tighten monetary policy, because doing so could choke off the U.S. economic recovery. That is why the euro was still worth almost $ 1.40 a year ago — and why I and others expected the euro to fall a long way against the dollar.

But the scope for dollar-bullish or euro-bearish surprises is much narrower today. Does anyone still believe that the U.S. economy is on the brink of recession? Or that the Bundesbank has the power to overrule ECB President Mario Draghi’s policy decisions?

With so much of the monetary divergence now discounted, perhaps we should focus more attention on the other factors that could influence currency movements in the months ahead.

On the side of a stronger dollar and weaker euro, there seem to be three possibilities.

One is that the Fed could raise interest rates substantially faster than expected. Another is that investors and corporate treasurers could become increasingly confident and aggressive in borrowing euros to convert into dollars and take advantage of higher U.S. rates. Finally, Asian and Middle Eastern central banks or sovereign wealth funds could take advantage of the ECB’s bond-purchase program to sell increasing proportions of their German, French, or Italian debt and reinvest the proceeds in higher-yielding U.S. Treasury securities.

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These are all plausible scenarios. But at least four factors could push the dollar-euro exchange rate the other way.

First, there is the effect of the strong dollar itself on the U.S. economy and its monetary policy. If the dollar continues to rise, U.S. economic activity and inflation will weaken. In that case, the Fed, instead of raising interest rates faster than expected, will probably become more dovish.

Currencies: Dollar steadies on renewed views of early Fed rate increase

The dollar was steady against the yen and the euro in Asia Friday, with the revival of expectations for an early U.S. rate increase giving support to the greenback.

The dollar USDJPY, +0.10%  was at ¥120.71, compared with ¥120.77 late Thursday in New York. The euro EURUSD, +0.05%  was at $ 1.0680 from $ 1.0660.

The overnight development in U.S. financial markets where stocks tumbled, U.S. Treasury yields and the dollar rose came in contrast with the previous day. On Wednesday, the Federal Reserve issued a dovish policy statement and its chairwoman Janet Yellen raised views that the Fed is likely to raise its key short-term interest rate in September or later.

“Given Thursday’s market development, as opposed to Wednesday’s, hopes for early Fed action haven’t receded. The possibility of June is still alive,” said Junichi Ishikawa, market analyst at IG Securities said.

Ishikawa cited how U.S. jobs and wage conditions, as well as inflation, will fare are crucial to gauging the timing of the Fed’s tightening down the road.

June rate hike back on the radar: “I personally think there is more than a 50% chance of the Fed’s rate increase in June, even though any action would be data-dependant,” said Yuji Saito, executive director of foreign exchange at Crédit Agricole Corporate & Investment Bank.

What does latest Fed move mean for economy?

Jason Meister of Avison Young New York Capital Markets joins MoneyBeat to discuss the Federal Reserve’s announcement Wednesday and what it means for jobs, markets and the economy.

Saito said it would be safe for the Fed to act when they believe they can minimize any shocks from its own action amid globally easing environments.

Read: The dollar’s meteoric rise may be just about over

Looking ahead, the release of both U.S. and Japan’s consumer price index data next week will be in focus as a clue for the direction of each monetary policy, said Saito who expects the dollar/yen rate to move in a ¥119-¥122 range next week.

Separately, the market mostly shrugged off remarks from the Bank of Japan Gov. Haruhiko Kuroda.

Speaking at the Foreign Correspondents’ Club of Japan, Kuroda said the BOJ is the first major central bank since the Great Depression to fight deflation, and if it succeeds, it “will strengthen confidence in central banks’ ability to achieve their price stability targets.”

Kuroda also said the central bank will make adjustments to its current policy as necessary without hesitation, when there are changes in the underlying trend in inflation.

The WSJ Dollar Index BUXX, -0.04% a measure of the dollar against a basket of major currencies, was down 0.14% at 88.33.

Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT Latest Previous %Chg Daily Daily %Chg 2150 GMT High Low 12/31 Dollar Rates Close High Low 12/31 USD/JPY Japan 120.71-72 120.76-77 -0.04 120.86 120.62 +0.83 EUR/USD Euro 1.0679-82 1.0659-62 +0.19 1.0697 1.0650 -11.72 GBP/USD U.K. 1.4760-65 1.4751-56 +0.06 1.4779 1.4744 -5.24 USD/CHF Switzerland 0.9893-97 0.9898-902 -0.05 0.9905 0.9874 -0.48 USD/CAD Canada 1.2685-90 1.2713-18 -0.22 1.2721 1.2674 +9.17 AUD/USD Australia 0.7673-77 0.7649-53 +0.31 0.7687 0.7645 -6.07 NZD/USD New Zealand 0.7431-37 0.7410-16 +0.28 0.7452 0.7404 -4.63 Euro Rate EUR/JPY Japan 128.90-94 128.70-74 +0.16 129.11 128.65 -11.05 Source: ICAP PLC

Write to Tatsuo Ito at [email protected]

(END) Dow Jones Newswires

March 20, 2015 01:28 ET (05:28 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.

Euro, Shares Rise As Dollar Lies Low Ahead Of Fed

(Reuters) – The euro and world shares gained on Tuesday as the dollar steadied before a two-day meeting of the U.S. Federal Reserve, where the Fed may edge closer to its first interest rate rise in almost a decade.

Solid gains for Asian markets overnight gave way to up and down trading in Europe. The euro notched its first two-day run of gains in three weeks, a disadvantage for the euro zone’s exporters.

Euro zone bonds paused and commodity markets and oil remained under pressure from a global supply glut, after losing as much as 4 percent in the previous session.

Fed policymakers will kick off their two-day meeting later, and many analysts expected them to remove the “patient” reference to rate rises from their policy statement. That would put them a step closer to their first hike since 2006.

Economists polled by Reuters are almost evenly split on whether a rate increase will come in June or later in the year. Downbeat U.S. manufacturing and housing data on Monday led to talk the Fed would remain cautious.

“U.S. data has remained on the weak side, despite tightness in the labour market. This allows the FOMC (Fed) to remove the patience language and remain dovish in the statement tomorrow,” said Nick Lawson, a managing director at Deutsche Bank.

“That so much discussion around the economy is still warranted whilst equity price performance marches on toward imperious new highs is clear evidence that assets are out- performing underlying economics.”

After weakening to a 12-year low of $ 1.0457 at the start of the week, the euro briefly topped $ 1.06 in early European trade, before running out of momentum and dipping back to $ 1.0590.

The dollar was broadly flat against a basket of major currencies as it steadied after its biggest drop in more than a month on Monday. Benchmark 2- and 10- year U.S. government bond yields also stabilised after five days of declines in the last six.

COMMODITIES CRUNCHED

Britain’s FTSE 100 was the only major index in Europe in positive territory by 1000 GMT. Wariness over the Fed offset the effects of the bond-buying programme the European Central Bank began last week.

London was up 0.4 percent, but Frankfurt’s Dax fell 0.4 percent and Paris’s CAC 40 lost 0.2 percent. Italian stocks dropped 0.4 percent and Spain’s declined 0.2 percent.

German business sentiment data from the ZEW institute saw a fifth consecutive rise in confidence, largely thanks to the ECB’s efforts to stimulate the euro zone economy.

Chinese shares reached seven-year highs in Asia trading on hopes that the Chinese government would loosen policy to bolster its slowing economy. Japan’s Nikkei climbed to a 15-year high as the yen edged lower after the Bank of Japan maintained its stimulus and its optimistic assessment of the economy at its latest meeting.

Beijing’s use of monetary and fiscal policies to bolster the economy is “identical to what happened in the U.S.,” when the Fed’s quantitative easing in 2009 caused U.S. stocks to soar, said Wu Wenzhe, fund manager at China International Management.

Australian shares climbed almost 0.8 percent and the aussie dollar fell after the Reserve Bank of Australia (RBA) left the door open for another interest rate cut.

Despite the pause in the U.S. dollar, Brent oil fell back below $ 54 a barrel in choppy trade, copper tumbled 1.4 percent and precious metal platinum slumped to a 5 1/2-year low.

“The sentiment around platinum is quite negative. It’s a combination of supply coming back online after the strikes last year and it’s certainly getting no support from the gold market,” said ANZ analyst Victor Thianpiriya.

GLOBAL MARKETS-Euro rises, shares sag as dollar lays low ahead of Fed

* World shares hit one-week high; Asia gain from dollar pause

* Fed begins two-day policy meeting later on Tuesday

* Bank of Japan maintains policy, economic assessment

* Chinese shares near seven-year high on policy hopes

* Platinum hits 5 1/2-year low as precious metals struggle

By Marc Jones

LONDON, March 17 (Reuters) – The euro gained on Tuesday as the dollar laid low before a two-day meeting of the U.S. Federal Reserve where the central bank may edge closer to its first interest rate rise in almost a decade.

Solid gains for Asian markets overnight failed to transfer to Europe where the recent rally in euro zone shares and bonds stalled as the euro notched its first two-day run of gains in three weeks, a disadvantage for the bloc’s exporters.

Wall Street was expected to give back around 0.3 percent of Monday’s 1.3 percent jump when it resumes, while oil and other commodity markets also remained under heavy pressure from a global supply glut.

Fed policymakers will kick off their two-day meeting later, and many analysts expected them to remove the “patient” reference to rate rises from their policy statement. That would put them a step closer to their first hike since 2006.

Economists polled by Reuters are almost evenly split on whether a rate increase will come in June or later in the year. But more downbeat housing data on Tuesday added to lacklustre U.S. manufacturing and other housing figures on Monday that had fuelled talk that the Fed would remain cautious.

“U.S. data has remained on the weak side, despite tightness in the labour market. This allows the FOMC (Fed) to remove the patience language and remain dovish in the statement tomorrow,” said Nick Lawson, a managing director at Deutsche Bank.

“That so much discussion around the economy is still warranted whilst equity price performance marches on toward imperious new highs is clear evidence that assets are out- performing underlying economics.”

After weakening to a 12-year low of $ 1.0457 at the start of the week, the euro had secured a firm foothold back above $ 1.06 as it hit $ 1.0620 as U.S. traders began to arrive for the day.

The dollar meanwhile was down against a basket of major currencies as it added to its biggest drop in more than a month on Monday. Benchmark 2- and 10- year U.S. government bond yields also made it six days of declines in the last seven.

COMMODITIES CRUNCHED

Britain’s FTSE 100 was the only major index in Europe in positive territory in early afternoon European trading. Wariness over the Fed offset the effects of the bond-buying programme the European Central Bank began last week.

London was up a meagre 0.1 percent, but Frankfurt’s Dax dropped 1.2 percent and Paris’s CAC 40 lost 0.8 percent. Italian and Spanish stocks both declined 1 percent.

The falls came despite German business confidence data from the ZEW institute seeing a fifth consecutive rise, largely thanks to the ECB’s efforts to stimulate the euro zone economy.

The region’s car makers, which have been flying along in the fast lane over the last nine months as the euro has dropped 25 percent, were among the day’s biggest losers, down 2.7 percent , as poor sales data saw them hit the skids.

A warning from rating agency Moody’s that a Greek exit from the euro would still have “serious consequences” also cast a shadow over the region.

That came as Greek Prime Minister Alexis Tsipras requested a meeting with top European leaders including German Chancellor Angela Merkel at this week’s EU summit, as his cash-strapped government, which has been locked in an ugly spat with Berlin in recent days, scrambles to stave off bankruptcy.

Chinese shares reached seven-year highs in Asia trading on hopes that the Chinese government would loosen policy to bolster its slowing economy. Japan’s Nikkei climbed to a 15-year high as the yen edged lower after the Bank of Japan maintained its stimulus and its optimistic assessment of the economy at its latest meeting.

Beijing’s use of monetary and fiscal policies to bolster the economy is identical to what happened in the U.S., when the Fed’s quantitative easing in 2009 caused U.S. stocks to soar, said Wu Wenzhe, fund manager at China International Management.

Despite the pause in the U.S. dollar, Brent oil fell towards $ 53 a barrel in choppy trade, copper tumbled 1.8 percent, gold buckled and fellow precious metal platinum slumped to a 5 1/2-year low.

“The sentiment around platinum is quite negative. It’s a combination of supply coming back online after the strikes last year and it’s certainly getting no support from the gold market,” said ANZ analyst Victor Thianpiriya.

(Editing by Ralph Boulton)