Tags: euro | falls | dollar | greece | bailout

Euro Falls Before Greece Debt Talks as Economic Data Disappoints

Friday, 20 Feb 2015 09:29 AM

The euro fell against the dollar and a gauge of future price swings jumped before the resumption of talks aimed at funneling funds to keep Greece solvent.

Only the Danish krone was weaker among world’s major currencies, tumbling after Reuters reported that Denmark’s central bank would consider capital controls to defend its peg to the common currency. Along with conflicting comments from lawmakers on the chances of success for the Greece talks, the euro was dragged lower after the region’s manufacturing expanded at a slower pace than analysts forecast.

“The market is just waiting for some clarity,” Matt Weller, an analyst at Gain Capital Holdings Inc. in Grand Rapids, Michigan, said by phone. “They’ll figure out a way, like they have before, and while it won’t necessarily be a long- term solution, it really seems to be the view of the market right now that it won’t be a big negative for the euro.”

The euro slid 0.6 percent to $1.1305 at 9:03 a.m. New York time, extending this week’s decline to 0.8 percent. It dropped 0.9 percent to 133.97 yen.

Weller said the euro “might still hold around this $1.13 level heading into next week.”

Three-month implied volatility for the euro against the dollar rose for the first time in nine days, climbing to 10.70 percent, set for the highest close in more than a week.

The krone plunged after Hans Jorgen Whitta-Jacobsen, head of the Economic Council that advises the government, told Reuters that Denmark’s central bank is willing to use extreme measures to defend its currency peg. It fell 0.8 percent to 6.5988 per dollar and 0.2 percent to 7.4610 versus the euro.

‘Difficult’ Talks

Euro-area finance ministers will hold the emergency talks with Greek officials later than previously scheduled amid increasing pressure to find a compromise on funding as the current bailout program will expire by the end of this month.

Germany sees Greece’s proposal for an extension of financial aid as a good signal for talks, government spokeswoman Christiane Wirtz told reporters in Berlin. The talks promise to be “difficult,” Malta’s Finance Minister Edward Scicluna said in an interview.

The euro fell 0.9 percent to 1.06977 Swiss francs, halting three days of gains.

“That would point to some nervousness about probability of agreement,” said Daragh Maher, a foreign-exchange strategist at HSBC Holdings Plc in London.

The euro declined 4.2 percent versus a basket of nine developed-nation peers this year, according to Bloomberg Correlation-Weighted Indexes. The yen climbed 4.5 percent and the dollar rose 3.3 percent.

Markit Economics’s manufacturing PMI for the euro region rose to 51.1 in February from 51 the previous month. That trailed the 51.5 estimate of analysts in a Bloomberg survey.

“We see the PMI data as disappointing, and perhaps that offered some last-minute opportunity to square books ahead of the Eurogroup summit,” said Roberto Mialich, a senior foreign- exchange strategist at UniCredit SpA in Milan. “That weighed on the euro.”

 

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The euro fell against the dollar and a gauge of future price swings jumped before the resumption of talks aimed at funneling funds to keep Greece solvent.Only the Danish krone was weaker among world's major currencies, tumbling after Reuters reported that Denmark's central...
euro, falls, dollar, greece, bailout
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2015-29-20
Friday, 20 Feb 2015 09:29 AM
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