BLBG:Euro Set for Weekly Gain on Speculation Greece Will Secure Second Bailout
The euro strengthened versus 15 of its 16 most-traded counterparts this week before Greek lawmakers vote this weekend on austerity measures needed for a second international aid package.
The 17-nation euro was 0.5 percent from a two-month high after Greece’s leaders announced they had reached an agreement on the measures. The dollar and yen rose against their major peers as Asian stocks declined, boosting demand for haven currencies. Australia’s dollar weakened after the Reserve Bank lowered its 2012 forecasts for growth and inflation.
“Just getting it done would be viewed as a positive step for global risk appetite,” Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney, said of the Greek deal. “The upside for the euro is still limited, but I think, in the near term, it’s possible to still improve somewhat further, maybe up toward $1.35.”
The euro was at $1.3262 as of 1:53 p.m. in Tokyo from $1.3286 in New York yesterday, when it reached $1.3322, the highest level since Dec. 12. It fetched 102.97 yen from 103.19.
Japan’s currency was at 77.65 per dollar from 77.67. It earlier slid to 77.75, the weakest since Jan. 26. The so-called Aussie dollar lost 0.7 percent to $1.0715 and retreated 0.7 percent to 83.19 yen.
The euro has advanced 0.8 percent against the dollar this week and 2.2 percent versus the yen.
Greek Accord
“The Greek Parliament will convene to vote on an agreement on the private sector involvement, bank recapitalization and authority for the prime minister and finance minister to sign the new memorandum at the weekend,” Pasok socialist party spokesman Christos Protopapas told reporters yesterday. An implementation law that includes the measures will be voted on in the next 10 to 15 days, he said.
Greek Finance Minister Evangelos Venizelos said euro-area counterparts refused to approve a 130 billion-euro ($173 billion) aid package for Greece yesterday at an emergency meeting because the government fell short of austerity demands. Another extraordinary assembly of the ministers was set for Feb. 15.
Demand for the euro was limited before reports next week that may indicate a faltering recovery in the 17-nation region.
European industrial production probably declined 1.4 percent in December, according to the median estimate of economists surveyed by Bloomberg News before figures are released Feb. 14. A report the following day may show the region’s gross domestic product fell 0.4 percent in the fourth quarter, according to the median forecast in a separate poll. That compares with a 0.1 percent gain in the previous period.
‘Under Pressure’
“The push-back from the Greeks shows you how tough these austerity measures are going to be,” said Justin Harper, head of research in Singapore at IG Markets. Europe’s poor state of health “keeps the euro under pressure.”
The dollar and yen strengthened on speculation Europe’s financial crisis is boosting uncertainty, supporting investor demand for safer assets.
“I’m very positive toward the dollar,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency margin company. “The shadow that Europe’s debt crisis casts over financial markets have yet to disappear.”
The MSCI Asia Pacific Index (MXAP) slumped 1 percent, paring its eighth weekly advance.
Europe’s shared currency has lost 3.1 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar has appreciated 3.9 percent and the yen has gained 1.1 percent.
Australia’s currency slid versus most of its major peers today after the central bank said it sees the economy expanding at an average of 3.5 percent this year, in its quarterly monetary policy statement released today, down from its Nov. 4 estimate of 4 percent.
Consumer prices will rise 3 percent in the year through to the fourth quarter, less than a previous prediction of 3.25 percent, the RBA said.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
