The Business Times

Euro rally fades as Greek deal hangs in the balance

Published Thu, Feb 12, 2015 · 12:07 AM

[SYDNEY] The euro took a dip early in Asia on Thursday, buffeted by a barrage of conflicting headlines that left investors no clearer on whether Greece may yet secure a new debt agreement with its European lenders.

The common currency eased to 135.95 yen, having earlier scaled a three-week peak of 136.70. It also slipped to US$1.1314 from a high of US$1.1353. On the sterling, it pulled back to 74.19 pence, but held above a seven-year trough of 73.83.

Markets had been on tenterhooks during a marathon meeting of euro zone finance ministers. CNBC initially lit a fire under the euro after it reported that Greece had reached an agreement with the European Union to stay in an EU bailout program.

The euro then chopped and changed when Reuters reported there was no deal yet and a Greek government official insisted there could be no extension of the deeply unpopular bailout.

In the end, euro zone finance ministers were unable to agree with Greece on a final statement or a way to continue talks until their next meeting on Monday. "This Greek drama has been a huge overhang over the market,"said Art Hogan, chief market strategist at Wunderlich Securities in New York. "Nobody was wanting to have a sloppy Greek exit disrupt the markets right now in what is a fragile European economy to begin with." With no real conviction to buy the euro, the dollar index held near a three-week high of 95.115 set overnight. On the yen, the greenback held firm at 120.22 and within striking distance of a five-week peak of 120.48.

Commodity currencies took a turn for the worse as oil prices slid anew after US stockpiles hit record highs.

The Canadian dollar dipped to a near two-week low of C$1.2697 per USD, while the Australian dollar drifted down to US$0.7716 and back toward the recent six-year trough of US$0.7627.

The next test for the Aussie is employment data due at 0030 GMT. Economists polled by Reuters expect a small rise of 5,000 jobs in January and the jobless rate to tick up to 6.2 per cent.


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