Exchange traded funds tracking the euro’s movements against the dollar strengthened on Monday with investors awaiting a key vote in Greece later in the week on spending cuts and higher taxes.
A morning rally carried CurrencyShares Euro Trust (NYSEArca: FXE) to a nearly 1% gain.
“Perhaps most important this week will be a vote in the Greek parliament on a new package of austerity measures,” said David Kelly, chief market strategist at JP Morgan Funds.
“It seems unlikely that the members of parliament who supported the prime minister in his confidence vote last week would abandon him this week, given the potential for financial chaos if this vote fails,” Kelly said in a note Monday. “If this is correct, and the vote passes, then the recently bubbled up European debt crisis may simmer down again – at least for a while.”
Greek Prime Minister George Papandreou survived a confidence vote last week but faces another test this week. A three-day debate on the austerity measures starts Monday, with a vote on Wednesday.
The euro gained ground Monday despite reports that hedge fund icon George Soros said countries leaving the euro is “probably inevitable.”
ETFs that invest in Italy and Spain fell last week on worries over banks’ exposure to Greek debt. [Spain, Italy ETFs Down 3% on Debt Jitters]
CurrencyShares Euro Trust
