BLBG:Euro Holds Near Three-Month Low on Greece Stalemate
The euro traded 0.2 percent from a more-than three month low as Greece remained divided on forming a new government, stoking concern that another election could set the stage for the country’s exit from the currency union.
The 17-nation euro remained lower, extending its longest losing streak since 2008, before French data that may show industrial production declined in March as the region’s debt crisis weighed on growth. Demand for the yen was supported after Japan posted a second monthly current-account surplus. The Australian dollar traded near the weakest level this year before the statistics bureau releases jobs data for April.
“The market has started anticipating Greece’s exit from the euro,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “Investors are also concerned that the Greek shock will spread to other periphery nations like Spain. Selling pressure for the euro remains intact.”
The euro was little changed at $1.2939 as of 10:22 a.m. in Tokyo from $1.2929 yesterday, when it touched $1.2912, the lowest level since Jan. 23. The shared currency added 0.1 percent to 103.08 yen from yesterday, when it fell to 102.76, the least since Feb. 16. The yen was little changed at 79.67 per dollar from yesterday when it strengthened 0.3 percent.
Australia’s dollar bought $1.0056 from $1.0051 yesterday, when it fell as much as 1 percent to $1.0021, the weakest since Dec. 20.
Evangelos Venizelos, Greece’s Pasok party leader and former finance minister, said he’ll try to form a government when he receives a three-day mandate from President Karolos Papoulias today. Pasok yesterday rejected terms for a government set by Alexis Tsipras of Greece’s anti-bailout Syriza party which then gave up its bid to build a coalition.
Greece Exit
Euro-area leaders from the European Central Bank’s Joerg Asmussen to German Finance Minister Wolfgang Schaeuble raised doubts that Greece can stay in the monetary union.
“If Greece decides not to stay in the euro zone, we cannot force Greece,” Schaeuble said at a conference sponsored by German broadcaster WDR in Brussels.
Asmussen, a member of the ECB’s executive board, told Handelsblatt on May 8 that for Greece “there is no alternative to the agreed consolidation program if it wants to remain a member of the euro zone.”
More than 50 percent of investors in a Bloomberg poll predict the 17-nation euro area is on the verge of losing one of its members as deadlock in Greece’s political turmoil threatens to push the debt crisis to new depths. Fifty-seven percent of the 1,253 investors, analysts and traders who are Bloomberg subscribers said at least one country will abandon the euro by year-end.
French Debt
The majority of respondents to the May 8 survey identified deterioration in Europe as a large threat to the world economy and were less willing to buy French debt as President-elect Francois Hollande takes power.
In France, industrial production probably fell 0.6 percent in March from the previous month, when it gained 0.3 percent, according to economists surveyed by Bloomberg. The national statistics office Insee in Paris will announce data today.
The euro has weakened 4 percent over the past six months, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 1.5 percent, and the yen dropped 1.3 percent.
‘Risk-Off Environment’
“The market is likely to stay in a risk-off environment because of uncertainty in Europe, and the bias is for haven currencies to be bought, such as the dollar and yen,” said IG Markets’ Ishikawa.
Japan’s Nikkei 225 Stock Average (NKY) fell 0.4 percent, after earlier dipping below 9,000 for the first time in three months.
The yen traded as strong as 79.61 per dollar after Japan released trade data for March. The nation had a current-account surplus of 1.59 trillion yen ($20 billion) for the month, the Ministry of Finance said today in Tokyo. The median economist estimate in a survey by Bloomberg News was for a surplus of 1.43 trillion yen.
Gains in the yen were limited as the currency’s 14-day relative strength index against the euro rose to 72 yesterday, above the 70 level some traders see as signaling an asset may reverse direction.
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
