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The euro fell from weekly highs reached against the dollar and the yen on Friday as investors took profits while waiting for a sign from Greece that an agreement had been reached on restructuring the nation’s debt.
The single currency gave up some of its gains against the yen after reaching its weakest level in 11 years against the Japanese currency earlier in the week, falling 0.3 per cent to Y99.64. The euro fell 0.4 per cent against the dollar to $1.2913.
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Currency analysts attributed much of the moves higher in the euro against the dollar during the week to investors covering existing short positions on the single currency. Investment banks said that most of their clients believed the euro would move lower against the dollar in the coming months.
“Most of the moves were profit taking following the heavy dollar selling from the rest of the week,” said Chris Walker at UBS.
“In our view, the market remains bearish on euros and the recent risk squeeze is simply providing investors with better levels to sell.”
Sterling rose to a high of $1.5501 against the dollar, with some traders speculating that news that a Chinese sovereign wealth fund was buying a stake in Thames Water could be positive for the pound – though analysts at Citi said it was still not clear what currency the purchase would be funded with.
By afternoon trading in London the pound was 0.1 per cent lower against the dollar at $1.5470 and 0.3 per cent higher against the euro at ÂŁ0.8343.
Emerging market currencies gave up some of their gains amid the general risk aversion on Friday but were broadly higher over the week against the US dollar.
The Turkish lira was down 0.2 per cent against the dollar to TL1.8297, but gained nearly 2 per cent over the week. The Mexican peso fell 0.2 per cent to 13.2485 pesos against the dollar but rose nearly 2.7 per cent over the week. The Brazilian real rose 0.1 per cent to R1.7261, a 3.3 per cent gain over the week.
Analysts at Credit Suisse said they were revising predictions for emerging market currencies up for the year, though they warned that short-term concerns over the eurozone could lead the dollar and the yen to outperform in the weeks ahead.
