Euro weak as Greek worries intensify, trades near 3-month low vs Swiss franc
Frankfurt (Apr 21) The euro was weaker across the board on Tuesday, pressured by deepening worries that Greece could default on its debt and eventually exit the currency union.
With Greece at the forefront, and very little in the way of an imminent bailout deal, political risks are set to dominate and would overshadow any upbeat reading from a German ZEW survey later in the day, traders said.
The euro was down 0.55 percent against the dollar at $1.0681, its second straight day of losses. It was also weaker against the yen at 127.55 yen while against the Swiss franc it was down 0.2 percent at 1.0245 francs not far from its lowest in nearly three months.
The single currency took a hit on Monday after public sector entities in Greece were ordered to transfer idle reserves to the central bank to help alleviate a cash squeeze.
Athens is in negotiations with its euro zone partners and the International Monetary Fund over reforms required to unlock remaining bailout funds before it runs out of cash and loses its ability to repay debt.
"The negative headlines about Greece, in the absence of anything major, are driving investors to pare positions in the euro," said Geoffrey Yu, currency strategist at UBS.
Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore, said the Greek worries are driving traders to sell the euro on rallies.
The market is keen to increase short positions in the euro "on any pop into (the) $1.0800 area", he said.
The latest development in the Greek debt saga came after the euro had climbed 1.9 percent against the dollar last week amid a pullback in expectations for a June interest rate hike by the Federal Reserve.
Some support for the euro could come from the German ZEW economic sentiment survey later in the day. The survey showed continuing improvement last month, but any positive impact on the euro is likely to be temporary, UBS's Yu added.
The dollar rose 0.3 percent against a basket of major currencies to 98.25. Against the yen, the dollar rose 0.13 percent to 119.42 yen.
Source: CNBC
