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Euro skids as Greek talks break down

Written by Business World, on 17th Feb 2015. Posted in EU

article headlineThe euro skidded on Tuesday after a collapse in talks to secure a new debt deal for Greece kept markets guessing about the next chapter in the nerve-wracking saga as Athens tries to secure improved terms with its creditors. The common currency was little changed at $1.1365, after slipping from Monday's high of $1.1429 and back near the bottom of its prevailing $1.1270-1.1534 range. Trading overnight was relatively light with U.S. markets shut for a public holiday. Against sterling, it came within a whisker of a 7-year trough of 73.69 pence set last week. It was last at 73.88 pence. Talks between Greece and euro zone finance ministers broke down when Athens rejected a proposal to request a six-month extension of its international bailout as "unacceptable". "All up, still no deal. And something of a disappointment after what seemed to be the makings of a spirit of compromise last week," said David de Garis, senior economist at National Australia Bank. Renewed weakness in the euro helped lift the dollar index to 94.296, from a one-week low of 93.899. The euro last fetched 134.70 yen, up 0.2 percent, after skidding to a one-week low of 133.96 yen. The dollar edged up 0.1 percent to 118.520 yen, crawling away from a 10-day low of 118.110 struck overnight. Traders said the dollar was given a bit of a reprieve versus the safe-haven yen after a decent 20-year Japanese government bond auction results helped soothe sentiment. The JGB market has undergone volatile swings this year, especially following debt auctions, becoming a source of concern among some currency participants worried about their potential impact on risk appetite. The collapse of the Greek debt talks unsettled markets although the consensus appears to still favour a last-minute deal for Greece, which faces the risk of running out of funds by the end of the month, when its bailout package expires. The next focus points in the debt saga will be on Wednesday and Friday. On Wednesday the European Central Bank decides whether to maintain emergency lending to Greek banks that are bleeding deposits at an alarming pace. And Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting with Greece, said Athens has until Friday to request an extension. Among commodity currencies, the New Zealand dollar was the best performer, reaching a three-week high of $0.7529. Broad euro weakness nudged up the Australian dollar 0.3 percent to $0.7798. There was scant market reaction to news Australia's central bank board had debated whether to cut interest rates this month or next, but opted for February which offered the opportunity of early additional communication in Friday's Statement on Monetary Policy. In minutes of the Feb 3 meeting, when the Reserve Bank of Australia cut its cash rate by a quarter point to a record low 2.25 percent, the central bank said members were told that growth risked staying below trend through 2015 if rates were left unchanged. (Reuters) For more visit: www.businessworld.ie

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