BLBG:Euro Touches Month Low on Concern Greece Won’t Secure Aid
The euro touched a one-month low amid concern that Greece will struggle to secure bailout funds, risking the nation’s future in the European currency bloc.
The 17-nation euro was lower against most of its 16 major counterparts with Greek Prime Minister Antonis Samaras facing obstacles from coalition partners as lawmakers are expected to vote this week on measures required to receive aid. The yen traded near its weakest level since April against the greenback as futures traders increased their bets the yen will decline versus the dollar to a six-month high.
“The market is increasingly losing confidence that Greece might get its extended bailout money because the governing coalition is unraveling or disagreeing more and more,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC) “We’ve seen the euro fall and it looks like it wants to go lower.”
The euro reached $1.2815, the weakest since Oct. 1, before trading at $1.2827 as of 6:41 a.m. in London from $1.2835 at the close last week. The currency slid 0.1 percent to 103.10 yen, following a 0.5 percent decline on Nov. 2. The dollar was little changed at 80.38 yen. It touched 80.68 on Nov. 2, the most since April 27.
Samaras pledged on Nov. 4 that the raft of wage and pension cuts in the latest austerity package will be the last and that Greek society won’t tolerate any more, according to comments made to lawmakers of his New Democracy party. The first parliamentary vote in Athens may come as early as Nov. 7.
Aid Negotiations
Negotiations between Greece and its troika of international creditors have sought to keep the country inside the European monetary union. In Athens, coalition leaders are squabbling over the terms of the latest package, while in other European capitals politicians are debating how to ease the country’s debt burden.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- the so-called net shorts -- was 37,020 on Oct. 30, the most since the week ended May 8, according to figures from the Washington-based Commodity Futures Trading Commission.
The greenback may extend gains against the Japanese currency after breaking above a key resistance level last week, according to Brown Brothers Harriman & Co., citing trading patterns.
The dollar rose above 80.65 yen, the 50 percent retracement of its decline from the March 15 high to its Feb. 1 low on the Fibonacci chart and could target 81.50, near the 61.8 percent level, Marc Chandler, global head of currency strategy at Brown Brothers, wrote in a note to clients today. The U.S. currency is supported around 80-80.15 yen, he wrote.
U.S. Election
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a new high or a low. Support and resistance refer to areas where analysts predict that orders to buy and sell may be clustered.
In the U.S., employment and the economy are central themes before tomorrow’s election, with President Barack Obama and Republican nominee Mitt Romney each trying to convince voters he can best energize the economic expansion.
The winner will also have to contend with the so-called fiscal cliff of more than $600 billion of federal spending cuts and tax increases that will take effect at the start of next year unless Congress acts.
U.S. Employment
The unemployment rate rose to 7.9 percent in October, after dropping to 7.8 percent the previous month, as employers took on more part-time workers, data released on Nov. 2 showed. The U.S. added 171,000 jobs in October, compared with the median economist forecast of 125,000 in a Bloomberg News survey and a revised 148,000 gain the previous month.
“Uncertainty over the election and fiscal cliff has been helping the dollar,” said Westpac’s Speizer.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, reached 80.654, the highest since Sept. 7, before trading little changed from Nov. 2 at 80.56.
Australia’s dollar strengthened after government data signaled improvement in the nation’s economy ahead of the Reserve Bank’s policy meeting tomorrow.
The nation’s retail sales climbed 0.5 percent in September from the previous month, the statistics bureau said in a report today. The median economist estimate in a Bloomberg survey was for a 0.4 percent gain. The trade shortfall was A$1.46 billion ($1.51 billion) in the same period from a revised A$1.88 billion in August, according to a separate release. Forecasters projected a A$1.55 billion deficit.
“Today’s data was a little bit better than expected, and the Aussie might see a modest boost here,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s largest lender.
The Australian dollar climbed 0.3 percent to $1.0365. It also rose 0.3 percent to 83.33 yen.
-- With assistance from Kristine Aquino in Singapore. Editor: Naoto Hosoda
To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
