BLBG:Euro Falls Before Leaders Meet To Discuss Greece; Aussie Drops
The euro fell for the first time in five days against the dollar as Greek Prime Minister Antonis Samaras prepared to meet with his German and French counterparts to ask for more time to meet economic targets.
The 17-nation currency pared the biggest weekly gain versus the greenback since February after a German lawmaker said Europe’s largest economy can’t make more money available for Greece. Samaras will meet German Chancellor Angela Merkel today and French President Francois Hollande tomorrow. The Australian dollar weakened after Reserve Bank Governor Glenn Stevens said the currency would probably fall if a mining boom ends.
“It wouldn’t be surprising if the euro goes lower, particularly given that Merkel and Hollande and other German officials have been very clear that they see absolutely no leeway whatsoever,” said Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon Corp. in London. A Greek exit from the euro is “a very real prospect and of course that inevitably is going to limit any dollar short position.” A short position is a bet an asset will fall.
The euro dropped 0.2 percent to $1.2541 at 9:02 a.m. London time, trimming its weekly advance to 1.7 percent. The common currency climbed to $1.2590 yesterday, the strongest level since July 4. The euro was little changed at 98.67 yen. The dollar strengthened 0.3 percent to 78.69 yen.
Germany can’t extend funding for Greece and the cash- strapped nation’s exit from the currency union would “not be a problem for the euro,” Volker Kauder, the parliamentary caucus leader for Merkel’s Christian Democratic Union, said today on ZDF public television.
Coordinated Approach
Merkel said she and Hollande will coordinate on their approach to Greece to keep pressure on the country at the heart of Europe’s debt crisis to overhaul its economy.
“It’s important to me that we all stand by our obligations and wait for the troika report and see what the result is,” Merkel said in a prepared statement late yesterday, referring to a report due next month on Greece’s progress in meeting its bailout terms.
The dollar strengthened against all of 16 major counterparts as a decline in stocks boosted demand for safer assets. The MSCI Asia Pacific Index of stocks dropped 1.3 percent, and the Stoxx Europe 600 Index fell 0.2 percent.
Australia’s dollar fell for a second day against the U.S. currency as Stevens said in testimony to a parliamentary panel that the nation’s resource investment boom will peak “within the next year or two.”
The so-called Aussie dropped 0.4 percent to $1.0396 after depreciating 0.6 percent yesterday.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editors responsible for this story: Daniel Tilles at dtilles@bloomberg.net
