BLBG:Euro Falls Versus Dollar as Greek Aid Talks Falter; Rand Weakens
The euro fell from the highest level in almost two weeks against the dollar after European finance ministers failed to agree on a debt-reduction package for Greece during more than 11 hours of talks in Brussels.
The shared currency declined against all but three of its 16 major peers after Luxembourg Prime Minister Jean-Claude Juncker said further work is needed on a package to alleviate Greece’s debt burden. The yen weakened beyond 82 per dollar for the first time since April after Japan’s exports decreased for a fifth straight month. The Dollar Index approached a two-month high amid stronger demand for the safest assets, while South Africa’s rand dropped against all its major peers.
“European policy makers raised expectations that something would happen on Greece and then they didn’t deliver,” said Ned Rumpeltin, head of Group of 10 currency strategy at Standard Chartered Bank in London. “What we are seeing is European risk coming back on to the agenda. It does put downward pressure on the euro.”
The euro dropped 0.3 percent to $1.2785 at 10:23 a.m. London time, after reaching $1.2830 yesterday, the most since Nov. 7. The yen fell 0.4 percent to 105.09 per euro and declined 0.6 percent to 82.20 per dollar after touching 82.26, the weakest since April 6.
“We have a series of options on the table on how to close the financing gap,” German Finance Minister Wolfgang Schaeuble told reporters in Brussels. “We discussed the issue very intensively, but since the questions are so complicated we didn’t come to a final agreement.”
Further Meeting
A further meeting has been arranged for Nov. 26, and an aid payment for Greece held up since June remains frozen.
The euro has declined 6.4 percent in the past 12 months, the second-worst performer of the 10 currencies tracked by Bloomberg Correlation-Weighted indexes. The yen dropped the most, sliding 7.8 percent, and the dollar fell 0.7 percent.
The Japanese currency weakened for a sixth day versus the greenback after Ministry of Finance said exports fell 6.5 percent in October from a year earlier, leaving a trade deficit of 549 billion yen. The median estimate of economists surveyed by Bloomberg News was for a shortfall of 360 billion yen.
“The trade numbers have added to the case for yen weakness,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney “The struggles of the Japanese exporters are becoming increasingly clear.”
The 14-day relative strength index for the dollar against the yen was above 70 for a fourth day today, the level that some traders see as a sign an asset is about to change direction.
‘Look Overbought’
“Dollar-yen and cross-yen look overbought,” said Yoshitsugu Fujita, assistant vice president of global markets at Sumitomo Mitsui Trust Bank Ltd. (TRBK) in New York. “The weak yen trend will reverse in the not-so-distant future.”
The Dollar Index rose after Federal Reserve Chairman Ben S. Bernanke said the U.S. risked falling back into recession unless lawmakers averted the so-called fiscal cliff, spurring demand for the safety of the U.S. currency.
An agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth, while failure to avoid the fiscal cliff -- $607 billion in automatic tax increases and spending cuts scheduled to take effect at the beginning of 2013 unless Congress acts -- would pose a “substantial threat” to the recovery, Bernanke said in a speech in New York yesterday.
The gauge, which is used to track the greenback versus the currencies of six U.S. trading partners, rose 0.2 percent to 81.090, approaching the 81.455 level that would be the most since Sept. 5.
The rand fell as much as 1 percent to 8.8421 per dollar.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net.
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.
