WSJ:Euro Sheds Gains as Greece Creditors Forced to Take Haircuts
By ALEXANDER MARTIN
TOKYO—The euro fell against the dollar and yen in late Asian trading Friday following an announcement that 85.8% of Greece's private sector creditors will participate in a massive debt swap deal, below the 90% threshold that would have spared reluctant creditors from being forced to take part.
Greek authorities said that 85.8% of the country's private sector creditors agreed to give up half of the face value of their existing bonds in the €206 billion swap deal, with that figure boosted to 95.7% after collective action clauses are activated to force other creditors to participate.
The debt swap will reduce the country's huge borrowings, marking a key moment in Europe's efforts to tackle its debt crisis.
Although the results were broadly in line with expectations and followed a day of euro gains on optimism over the debt swap, traders said that some market players sold the euro when it became clear that participation rate was not over 90%.
The debt swap will likely trigger credit default swaps. The International Swaps and Derivatives Association said it has already received a question on whether Greece has suffered a "credit event" and will meet at 1 p.m. London time to rule on the matter.
Greece must consult with its euro-zone rescuers on legal maneuvers to force reluctant creditors to take part and a teleconference of euro-zone finance ministers is also scheduled for 1 p.m. London time.
"Earlier in the day, some had hoped for higher rates that would allow Greece not to use the collective action clauses," said Tomohiro Nishida, senior dealer at Chuo Mitsui Trust and Banking, adding some investors were also "selling on the fact" after the result.
Away from Europe, the market is focused on U.S. February employment data due later in the day for signs of improvement in the world's largest economy.
Economists expect nonfarm payrolls to gain by 213,000 and the jobless rate to stay unchanged at 8.3% in the month, according to the results of a survey by Dow Jones Newswires.
Junya Tanase, chief forex strategist at J.P. Morgan in Tokyo said that both the dollar and yen will be sold if the jobs data exceed market expectations and spur investor risk appetite, which could also lead to a rise in yen-crosses.
"There is high possibility the USD/JPY could climb, at least in the near term," if the jobs data prove to be stronger than expected, he said.
Mr. Tanase added that the dollar could rise over ¥82.00, pushing forward expectations of a rate hike by the U.S. Federal Reserve.
Friday afternoon in Tokyo, the euro was at $1.3239 from $1.3274 late Thursday New York trading, according to trading platform EBS. The common currency was at ¥108.07 from ¥108.26. The dollar was at ¥81.62 from ¥81.55.
