BLBG:Euro Holds Gain Before Luxembourg’s Juncker Visits Greece
The euro rose to a six-week high against the yen before regional leaders meet this week to discuss Greece’s fiscal adjustment program amid optimism the European debt crisis is being contained.
The 17-nation currency appreciated for a second day against the dollar as Spanish borrowing costs declined today at a bill auction. The dollar weakened against all except one of its 16 major counterparts before a report tomorrow forecast to show U.S. home sales improved last month, reducing demand for safer assets. Australia’s dollar strengthened 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 strengthened 0.5 percent to 98.57 yen at 6:02 a.m. in New York after climbing to 98.66 yen, the highest level since July 6. The single currency rose 0.5 percent to $1.2413. It earlier advanced to $1.2419, the strongest since Aug. 7. The dollar was little changed at 79.42 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 sold 4.51 billion euros of 364- and 546-day bills. The average yield on the one-year securities was 3.07 percent, compared with 3.92 percent at a previous auction on July 17. Investors bid for 1.91 times the number of securities allotted, down from 2.23 times at the previous sale.
Euro’s Gain
Europe’s shared currency has advanced 0.3 percent over the past month, according to Bloomberg Correlation-Weighted Indexes which track the currencies of 10 developed nations. The dollar fell 2 percent, and the yen declined 3.3 percent.
The single currency has still weakened almost 14 percent against the dollar over the past year, data compiled by Bloomberg shows. Its decline contributed to a 15 percent drop in second-quarter profit at Athens-based Coca-Cola Hellenic Bottling Co. SA, the company said today.
“Strong currency headwinds and higher input costs also adversely affected profit in the quarter,” Dimitris Lois, chief executive officer, said in a Bloomberg News interview.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the currency against those of six U.S. trading partners, dropped 0.4 percent today to 82.134, after falling to 82.097, the lowest level since Aug. 7.
Sales of existing homes in the U.S. increased to an annual rate of 4.51 million in July from 4.37 million in June, according to a Bloomberg survey before tomorrow’s report. Orders for durable goods accelerated last month, a separate Bloomberg survey forecast before the data on Aug. 24.
Aussie Gains
The so-called Aussie rose the most in two weeks versus the greenback 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 $1.0505 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
