Euro slumps, bonds rally after ECB puts more pressure on Greece

BY RYAN VLASTELICA
The euro slumped late on Wednesday and safe-haven U.S. government bonds rallied after the European Central Bank abruptly canceled its acceptance of Greek bonds in return for funding, putting more pressure on Greece to reach new reforms.
The move, which means that the Greek central bank will have to provide its banks with tens of billions of euros of additional emergency liquidity in the coming weeks, was a response to what many in Frankfurt saw as the Greek government’s abandoning of its aid-for-reform program.
The action was unexpected and fueled a drop of 1.3 percent in the euro EUR=, while the U.S. dollar index .DXY extended its gains and jumped 0.9 percent, nearly erasing its biggest one-day fall since October 2013 in Tuesday’s session.
In an indication of how Greek equities might trade on Thursday morning, the Global X FTSE Greece (GREK.P) exchange-traded fund dropped 10 percent in the last half-hour of the New York trading session.
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