BLBG:Euro Holds Gain Before Luxembourg’s Juncker Visits Greece
The euro advanced for a second day against the dollar as optimism euro-region leaders meeting this week will agree to extend Greece’s fiscal adjustment program increased demand for the region’s assets.
The 17-nation currency climbed to the strongest in six weeks against the yen as Spanish bonds rose before the nation sells bills today. The dollar weakened against most of its major counterparts before a report tomorrow forecast to show U.S. home sales improving, damping demand for the safety of the greenback. Australia’s dollar rose the most in two weeks after minutes of the central bank’s August meeting showed policy makers see domestic growth overshadowing a “fragile” global outlook.
“The market focus is on the meetings that are happening in and around Greece and the key question is whether or not they allow an extension to the fiscal adjustment program,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “They will get there. The euro could move higher. Riskier assets are doing OK.”
The euro rose 0.5 percent to $1.2415 at 9:06 a.m. London time after appreciating to $1.2417, the strongest level since Aug. 7. The single currency advanced 0.6 percent to 98.60 yen. It climbed to 98.63 yen, the highest since July 6. The dollar was little changed at 79.45 yen.
Europe’s shared currency will struggle to breach a key level of so-called resistance at $1.2450, Kendrick said. Resistance refers to an area where orders to sell an asset may be clustered.
Greek Visit
Luxembourg Prime Minister, Jean-Claude Juncker, who heads the group of euro-area finance ministers, visits Greece tomorrow and will discuss a request by Greek Prime Minister Antonis Samaras for a two-year extension to the indebted nation’s fiscal adjustment program. Samaras travels to Berlin and Paris on Aug. 24 and 25 after French President Francois Hollande and German Chancellor Angela Merkel meet in the German capital on Aug. 23.
“The hurdles are still high, but European leaders do seem to be working towards more positive results,” said Callum Henderson, global head of currency research at Standard Chartered Plc in Singapore. “This is a period of calm before a resumption of the bear trend for the euro.” The bank forecasts the euro will weaken to $1.18 by Sept. 30, Henderson said.
Spain will sell as much as 4.5 billion euros of 546-day and 364-day bills today. The nation’s 10-year bond yield fell four basis points to 6.24 percent, extending its decline over the past month to more than one percentage point.
Euro’s Advance
The euro has advanced 0.3 percent in the past month, according to Bloomberg Correlation-Weighted Indexes which track the currencies of 10 developed nations. The dollar fell 2.1 percent, and the yen declined 3.3 percent.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the currency against those of six U.S. trading partners, dropped 0.4 percent to 82.127, after falling to 82.114, the lowest level since Aug. 7.
Combined purchases of new and existing houses in the U.S. increased to a 4.51 million annual rate in July from a 4.37 million pace in June, according to a Bloomberg survey before tomorrow’s report. The Federal Reserve will publish minutes of its two-day meeting that ended on Aug. 1 tomorrow.
Aussie Gains
The so-called Aussie rose for a second day against most of its major counterparts as the Reserve Bank of Australia made no mention of intervening to curb the currency’s strength, which has persisted despite a decline in the terms of trade.
The central bank predicts an expansion rate over the “medium term” at around the economy’s trend pace, even as Europe’s woes cloud the outlook, according to minutes of the RBA’s board meeting Aug. 7 that were released today in Sydney. The central bank kept its benchmark interest rate unchanged at 3.5 percent for a second month after the gathering.
“The market was looking for a fair bit more commentary on the Aussie dollar itself following the monetary policy statement a week and a half ago as well as the statement accompanying the policy decision where the RBA seemed to ramp up its rhetoric about the currency,” said David Forrester, senior vice- president for Group-of-10 foreign-exchange strategy at Macquarie Bank Ltd. in Singapore.
The Australian dollar rose 0.6 percent to $1.0511 after strengthening as much as 0.7 percent, the biggest intraday gain since Aug. 3.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
