BLBG:Euro Near Three-Month Low on Greek Leadership Concern
The euro traded 0.6 percent from a three-month low as Greece’s political leaders meet for a second day in a bid to form a new government, after an election raised questions about the country’s membership of the euro bloc.
The 17-nation currency maintained a two-day decline against the yen after French President Nicolas Sarkozy, German Chancellor Angela Merkel’s preferred partner for enforcing debt reductions, was defeated by Socialist Francois Hollande. Demand for the yen was limited as Asian stocks climbed before data that may show German industrial production rebounded. Australia’s dollar was close to this year’s low after the country’s trade deficit more than doubled in March.
“Regardless of which party eventually manages the Greek government, the next period here looks to be full of uncertainty,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “That’s going to be a negative for the euro.”
The euro slid 0.1 percent to $1.3033 as of 7:04 a.m. in London from $1.3051 yesterday, when it touched $1.2955, the weakest since Jan. 25. The common currency was at 104.21 yen from 104.28. Japan’s currency slid 0.1 percent to 79.96 per dollar.
The Australian dollar declined 0.1 percent to $1.0190. It yesterday touched $1.0110, the lowest since Dec. 29, before rallying 0.2 percent on the day.
New Democracy leader Antonis Samaras said he failed to forge agreement to form a Greek government after weekend elections. The attempt will pass to Alexis Tsipras, the head of Syriza, the second biggest party, which has vowed to cancel bailout terms for the nation. Tsipras will see President Karolos Papoulias today at 2 p.m. Athens time.
Grenade Passed On
“They passed on the mandate to the second-biggest political group, which is against austerity and hence by default for an exit out of the euro zone,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, wrote in an e-mailed research note dated today. “The grenade has been passed on, the pin is removed as it has been for the past two years.”
Hollande’s platform calls for policies Germany’s Merkel opposes, including increased spending and delayed deficit cuts. Merkel invited Hollande to Berlin for talks “as soon as possible,” a statement from her government said on May 6.
German industrial production probably rose 0.8 percent in March from the previous month when it slid 1.3 percent, according to the median estimate of economists surveyed by Bloomberg News before the data due today.
The MSCI Asia Pacific Index (MXAP) of stocks rose 0.3 percent, snapping a three-day decline.
The euro has declined 4.2 percent over the past six months, according to Bloomberg Correlation-Weighted Indexes tracking 10 developed-nation currencies. The dollar has risen 2.4 percent and the yen has lost 0.8 percent, the indexes show.
Intervention Risk
Demand for the yen was also limited after Japan’s Finance Minister Jun Azumi said he’s watching for speculative currency moves, highlighting prospects the nation will intervene to weaken the yen for the first time this year. Japan is ready to take appropriate action in the foreign-exchange market if needed, Azumi said to reporters in Tokyo yesterday.
“When the yen gets too strong you have the Bank of Japan (8301) intervention risk,” said Westpac’s Speizer. “The 79-mark would start to weigh on people’s mind, and that should be a good support for the dollar-yen.”
Australia’s dollar failed to extend a gain from yesterday after the nation reported its biggest trade deficit in almost 2 1/2 years. Imports outpaced exports by A$1.587 billion ($1.61 billion) in March, from a revised A$754 million deficit the previous month, the Bureau of Statistics said in Sydney today. The median economist estimate in a Bloomberg survey was for a deficit of A$1.3 billion.
New Zealand Dollar
The New Zealand dollar is likely to continue weakening after falling below the so-called cloud on its weekly ichimoku chart, according to Barclays Capital.
The so-called kiwi has breached the lower end the cloud, which refers to the area between the first and second leading span lines on the chart, “clearly” for the first time since 2008, Masafumi Yamamoto, chief currency strategist in Tokyo at Barclays, wrote in a note today. The New Zealand dollar may target 77.9 U.S. cents, which is the 61.8 percent Fibonacci retracement of its advance from the November low to the February high, he said.
New Zealand’s dollar has fallen 3 percent this month and traded at 79.36 cents, 0.1 percent below yesterday’s close in New York. It last reached the 77.9-cent level on Jan. 9.
To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
