BLBG:Euro Headed for Weekly Decline Against Dollar, Yen on Greek Debt Concern
The euro headed for a weekly decline against the dollar and the yen as Greece and its creditors struggle to reach an agreement on a debt swap.
The greenback was headed for a weekly loss against most of its major peers before a report economists said will show U.S. employers increased payrolls in January. Japan’s currency traded within one yen of a postwar high versus the dollar, raising speculation the country will intervene in the markets to weaken it. The euro held losses from yesterday against the yen as finance ministers from Germany, Finland, Luxembourg and the Netherlands were said to hold talks in Berlin today.
“The continuing uncertainty in Greece has contributed to a slightly weaker euro this week,” said Michael Derks, chief strategist at broker FXPro Financial Services Ltd. in London. “The separate demands being made of the Greek government by the troika and the growing clamor for official sector haircut have held the process up and are prolonging an announcement.”
The euro was little changed at $1.3152 at 8:53 a.m. London time, set for a 0.5 percent weekly decline. The common currency was also little changed at 100.22 yen, poised for a 1.2 percent drop since Jan. 27.
The yen traded at 76.19 per dollar. It strengthened to 76.03 on Feb. 1, approaching the post-World War II record of 75.35 set on Oct. 31.
Debt Talks
In discussions late last week in Athens, holders of Greek bonds lowered their demands for an average coupon on the new debt they would get after European officials demanded they take steeper losses.
Finance ministers from the four euro-area countries with AAA grades from all three major ratings companies -- Germany, Finland, Luxembourg and the Netherlands -- will meet in Berlin today, a German Finance Ministry spokesman, said yesterday. The ministers will discuss current issues without briefing reporters after the meeting, according to the spokesman, speaking on the condition of anonymity.
Luxembourg Prime Minister Jean-Claude Juncker said Greek bond-swap talks with private creditors are “ultra difficult,” and the steps to tackle the debt crisis adopted at a summit on Jan. 30 were “largely insufficient.” European Union leaders will need to take further steps when they convene again in early March, Juncker said in a speech in Luxembourg yesterday.
Morgan Stanley cut its fourth-quarter 2012 forecast for the euro to $1.15 from a previous projection of $1.20, according to a research note published yesterday.
Intervention Risk
Japan’s Finance Minister Jun Azumi said today he will take decisive steps against one-sided moves in the yen if needed. The currency’s level doesn’t reflect economic fundamentals, and falling U.S. interest rates are increasing speculative yen buying, he told reporters in Tokyo. Japan sold the yen on Oct. 31 on concern its advance to a record would hurt exporters.
“Jawboning by the Japanese authorities has increased significantly over the past week,” said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. “We judge that the near-term risk of direct intervention is now high.”
The yen has gained 6.1 percent over the past six months, the second-best performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 6.6 percent and the euro dropped 2.8 percent.
U.S. Unemployment
In the U.S., employers increased payrolls by 140,000 in January after rising 200,000 in December, according to the median estimate of 89 economists surveyed by Bloomberg News. Unemployment probably held at 8.5 percent in January from the previous month, a separate survey shows.
“The market is expecting some cooling in employment growth in January,” said Jane Foley, a senior currency strategist at Rabobank International in London. “In the absence of a very strong number today, I would expect further range trading for euro-dollar.”
Implied volatility of three-month options of Group of Seven currencies was at 10.3 percent from as much as 10.6 percent yesterday, according to the JPMorgan G7 Volatility Index (JPMVXYG7). A drop makes investments in currencies with higher lending rates more attractive because the risk in such trades is that market moves will erase profits.
The MSCI Asia Pacific Index (MXAP) of stocks slipped 0.1 percent.
China’s yuan halted a four-day gain after a report showed expansion in the nation’s non-manufacturing industries slowed.
A purchasing managers’ index declined to 52.9 last month from 56 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement today in Beijing. A reading above 50 indicates growth.
The yuan was little changed from yesterday at 6.3050 per dollar, according to the China Foreign Exchange Trade System.
-- With reporting by Masaki Kondo in Singapore. Editors: Mark McCord, Nicholas Reynolds
To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
