BLBG:Euro Advances to Two-Month High Before Greece Meeting, ECB Policy Decision
The euro rose to two-month highs against the dollar and yen on speculation a meeting of regional finance ministers today will approve a second financing accord for Greece, boosting demand for European assets.
The 17-nation currency pared gains after Greek Finance Minister Evangelos Venizelos said there were still doubts on the agreement needed to win a 130 billion-euro ($173 billion) rescue package. The European Central Bank meets today to set monetary policy, after which President Mario Draghi will hold a press conference. The yen and dollar fell against most of their major counterparts as stock gains sapped demand for safer assets.
“The euro is trading higher on expectation a deal is imminent” for Greece, said Neil Jones, head of European hedge- fund sales at Mizuho Corporate Bank Ltd. in London. “We understand only some detail remains until agreement. After the ECB decision arrives, all eyes will switch from Greece to Draghi to gauge the dovishness or hawkishness from the conference.”
The euro climbed 0.1 percent to $1.32769 at 10:58 a.m. London time after rising to $1.3313, the highest since Dec. 12. The common currency rose 0.3 percent to 102.440 yen after reaching 102.77 yen, the strongest since Dec. 13. The yen dropped 0.2 percent to 77.16 per dollar.
Greek Prime Minister Lucas Papademos and the leaders of the three parties supporting his government “agreed on all the points of the program with the exception of one which requires further elaboration and discussion” with the lenders, according to an e-mailed statement from the premier’s office in Athens.
‘Bar One’
The shared currency pared gains after Finance Minister Venizelos said a deal was still to be finalized. “As the prime minister said, there is agreement on all the issues bar one,” he told reporters in Athens.
Euro-area finance ministers and International Monetary Fund Managing Director Christine Lagarde will meet at 6 p.m. in Brussels, according to a statement by Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of finance chiefs from the currency bloc.
The ECB will keep its benchmark interest rate at 1 percent today, according to all but two of 57 analysts surveyed by Bloomberg. The others predicted a cut to 0.75 percent. The rate was held at 1 percent at the central bank’s January meeting, following quarter-point reductions in November and December.
Draghi is scheduled to hold a press conference at 2:30 p.m. in Frankfurt.
Monthly Gain
The euro has gained 0.7 percent in the past month according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar dropped 3.7 percent and the yen declined 4.1 percent.
The yen and dollar weakened as the Stoxx Europe 600 Index (SXXP) of shares gained 0.2 percent and the MSCI Asia Pacific Index (MXAP) gained 0.1 percent.
The Dollar Index (SXXP), which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, dropped 0.2 percent to 78.554 after touching 78.407, the lowest since Dec. 8.
Pound Gains
The pound strengthened against the dollar after U.K. data showed manufacturing production rose more in December than economists forecast.
British factory output increased 1 percent from the previous month, when it fell a revised 0.1 percent, the Office for National Statistics said in London. Economists forecast a 0.2 percent increase, according to a Bloomberg News survey.
The Bank of England will increase bond purchases by 50 billion pounds ($79.2 billion) at a policy meeting today, according to a separate Bloomberg survey.
The central bank may raise purchases by 75 billion pounds “assuming the BOE can find the available assets to purchase, given they are running out of available options,” Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney, wrote in a report today. “The higher outcome would likely weigh on the pound.”
The pound advanced 0.1 percent to $1.5840 after falling 0.5 percent yesterday.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
