BLBG:Euro Within a Cent of Four-Month Low Before Spanish Sales
The euro was within one cent of a four-month low as Spain prepared to sell debt amid concern that contagion from Greece is spreading and pushing up borrowing costs across the region.
Europe’s shared currency held yesterday’s gain versus the yen after European Central Bank President Mario Draghi signaled the central bank won’t compromise on its key principles to keep Greece in the euro area. Spain is set to sell as much as 2.5 billion euros ($3.2 billion) of three- and four-year securities. The Australian and New Zealand dollars strengthened, snapping four-day declines.
“The market is still mainly driven by developments in Europe, we are going to be in a period of prolonged heightened uncertainty,” and euro weakness, said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Spain’s 10-year auction will be closely watched today. Investors are fearful that Europe’s firewalls aren’t enough to protect against contagion. We still favor the more defensive currencies like the yen and the dollar.”
The euro was little changed at $1.2723 at 8:56 a.m. London time, after dropping to $1.2681 yesterday, the weakest level since Jan. 17. The shared currency was also little changed at 102.17 yen after sliding to 101.91 yesterday, the lowest since Feb. 14. The yen was at 80.33 per dollar.
The Australian dollar rose 0.2 percent to 99.37 U.S. cents. New Zealand’s currency also advanced 0.2 percent, to 76.58 U.S. cents.
Greece is heading toward national elections six weeks after the last vote, with its future in the 17-nation euro area and the international bailout at stake.
Draghi acknowledged for the first time yesterday that Greece could leave the monetary union. While the bank’s “strong preference” is that Greece stays in the 17-nation euro area, the ECB will continue to preserve “the integrity of our balance sheet,” he said in a speech in Frankfurt yesterday.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net Kristine Aquino in Singapore at +65- kaquino1@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.
