BLBG:Euro Falls Versus Dollar, Yen Before Ministers Meet on Greece
The euro fell to a seven-week low against the dollar on concern European finance ministers meeting today and tomorrow will fail to quell speculation Greece will have to restructure its debt.
The 17-nation currency dropped against 10 of its 16 major counterparts as Greece today asks for a boost to its 110 billion-euro ($155 billion) financial lifeline from European governments and the International Monetary Fund. The Dollar Index rose to a six-week high. The Australian dollar fell for a fourth day as commodity prices fell and a report showed home- loan approvals declined.
“The market is closely watching what will come out from this week’s meetings,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign- exchange margin-trading services. “Any preemptive move is unlikely, and concern about Greece’s restructuring may spread to countries like Ireland. That may continue to give selling pressure for the euro.”
The euro dropped to $1.4100 as of 6:41 a.m. in London from $1.4119 in New York on May 13. It earlier reached $1.4048, the lowest level since March 29. The shared currency was at 114.14 yen from 114.06. It touched 113.42 yen, the weakest level since March 18, the day when Group of Seven nations sold yen to stem its surge after an earthquake and tsunami in Japan. The dollar fetched 80.95 yen from 80.80.
Aid for Greece
Ministers will discuss Greece’s financing needs at meetings starting at 3 p.m. in Brussels today. Also on the agenda are approval of 78 billion euros in aid for Portugal and the nomination of Bank of Italy Governor Mario Draghi to be the next president of the European Central Bank.
IMF Managing Director Dominique Strauss-Kahn has been charged with attempted rape and a criminal sex act on a woman in a New York hotel, police said. Strauss-Kahn denies the charges.
“The euro is likely to react negatively as the IMF head’s arrest injects a degree of uncertainty at a critical moment in the euro zone sovereign debt crisis,” Gareth Berry, a foreign- exchange strategist at UBS AG in Singapore, wrote in a note to clients yesterday.
The euro has dropped 1.1 percent over the past month in a measure of the currencies of 10 developed nations, according to Bloomberg Correlation-Weighted Currency Indexes. The yen has gained 4.5 percent, while the dollar is up 1.5 percent.
U.S. Recovery
The dollar rose versus 13 of its 16 major counterparts. The Federal Reserve Bank of New York will say today its general economic index was 19.7 in May from 21.7 in April, according to the median estimate of economists surveyed by Bloomberg News.
Readings greater than zero signal expansion in the so- called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut. That would be the first decline in the gauge in six months.
“The overall trend is that the U.S. economic recovery is solid,” said Morio Okayasu, chief analyst in Tokyo at FOREX.com Japan Co., a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey. “The fact that the Fed needs to shift its monetary policy sooner or later is positive for the dollar.”
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, increased to as much as 76.000 today, the highest level since April 5. The Fed has kept its key rate at zero to 0.25 percent since December 2008 and is aiming to boost growth by completing $600 billion of Treasury purchases through June.
Commodities, Stocks
Crude oil dropped 1 percent, and the MSCI Asia Pacific Index of stocks slid 1.3 percent. Australian home-loan permits fell 1.5 percent in March, the statistic bureau said today.
“There’s a lot of concern about the unwind of commodities,” said Derek Mumford, a Sydney-based director at Rochford Capital, a foreign exchange and interest-rate risk management firm. “The Aussie had a volatile range last week and that very choppy trading could continue this week.”
Australia’s dollar fell 0.2 percent to $1.0553. It reached $1.0521 on May 13, the least since April 20.
The yen gained earlier after Japan’s machine orders advanced 2.9 percent after dropping a revised 1.9 percent in February, the government reported today. The median estimate of economists in a Bloomberg News survey was for a 10 percent decline.
“Conditions are favorable for the yen” as stocks fall, said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender. “The machine orders came as a surprise and contributed to yen buying.”
Futures traders reversed their bets that the yen will decline against the greenback, figures from the Washington-based Commodity Futures Trading Commission showed on May 13. The difference in the number of wagers by hedge funds and other large speculators on an advance in the yen compared with those on a drop -- so-called net longs -- was 13,054 on May 10, compared with net shorts of 18,819 a week earlier.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
