[wafiqfx]

Dollar gains following G-20 meeting

Spoiler for G-20:

NEW YORK (MarketWatch) — The dollar gained on Monday, with the euro falling from a three-month high, after the Group of 20 nations refused to boost funding for the International Monetary Fund until the euro zone increases the size of its own regional firewall.

G-20 finance ministers, meeting over the weekend in Mexico City, said that they supported adding funds, via the IMF, to shore up the euro zone’s finances. But Europe first must contribute more money, they said. See report on G-20 statement.

The meeting “made one thing very clear: there is undoubted scepticism on the part of the international backers regarding the handling of the crisis in Europe,” said currency analysts at Commerzbank. “Many parties in particular stressed the necessity of an efficient mechanism for containing the crisis. It will be difficult for Europe to avoid these demands long term.”

European stocks declined and U.S. equities initially followed lower, but turned positive in late morning action, buoyed by a positive U.S. report on pending home sales and news that Germany’s parliament approved the second bailout for Greece. Read about Germany, Greece bailout.

Markets are expecting euro-area banks to draw around 450 billion euros in fresh 3-year financing, slightly less than the €489 billion borrowed at the first LTRO in December, said currency strategists at Forex.com.

“Should banks take up less than €400 billion, we think European government bond markets may be disappointed and we could see yields start to move higher again, which might take some of the wind out of the euro’s sails,” they wrote in a note.