MW: Euro drops on Greek debt fears; dollar nears year high vs. yen
The euro hit a one-month low against the dollar Tuesday as fears lingered about the Greek debt situation, while the dollar hit a fresh two-month high against the yen.
The euro EURUSD, -0.5375% touched as low as $1.0884, its lowest since April 28, before bouncing back a bit to $1.0906. That was lower than $1.0976 late Monday in North America.
“With Greece-related incentives emerging again, the euro downside is accelerating,” said Michiyoshi Kato, senior vice president of forex sales at Mizuho Bank.
“In any case, we may expect the euro to weaken toward parity (against the dollar),” said Kato, noting that the eurozone has introduced powerful monetary easing steps, partly in the form of negative interest rates.
Concerns emerged over the weekend as Greek Interior Minister Nikos Voutsis said Sunday that the government won’t have the money it is due to repay the International Monetary Fund next month unless it strikes a deal with international creditors over further rescue funding.
Greece is scheduled to repay €1.6 billion ($1.76 billion) to the IMF between June 5 and June 19.
A Greek government spokesman stated Monday that the country has the responsibility to repay its obligations both internally and to its international creditors, and that the government aims to have a deal by the beginning of June.
The common currency EURJPY, +0.20% was sold broadly against its major peers, going as low as ÂĄ133.10 from ÂĄ133.49, its cheapest since April 30. The single currency GBPEUR, +0.1774% also fell to 70.77 pence from 70.96 pence.
In other currency trade, the dollar USDJPY, +0.80% reached ¥121.85, the highest since March 10. That was higher than ¥121.57 overnight but still short of the year’s high of ¥122.04 set on March 10 amid a lack of catalysts to lift the greenback higher.
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Market participants are now looking for fresh trading cues in U.S. economic data later this week such as April durable goods orders and January-March revised gross domestic product. These could provide further evidence that the U.S. economy maintains a faster growth rate than Japan and the eurozone, eventually allowing the Federal Reserve to raise interest rates. Read a preview of the data
Fed Vice Chairman Stanley Fischer said Monday the central bank expects to follow a “gradual and relatively slow” trajectory of short-term interest-rate increases over the next three to four years to bring borrowing costs back to “normal” levels.
The WSJ Dollar Index BUXX, +0.49% , a measure of the dollar against a basket of major currencies, was up 0.21% at 86.82.
