The euro fell to the lowest in almost eight weeks against the dollar amid speculation Greece will struggle to win bailout funds, risking the nation’s future in the European currency bloc.
The euro declined versus all its 16 major counterparts after Greek Prime Minister Antonis Samaras pledged yesterday that proposed wage and pension cuts will be the last as he struggled to win political support for measure to assure the country’s lifeline. The Dollar Index rose for a third day before tomorrow’s U.S. presidential election. The pound fell against the dollar after U.K. services growth slowed. Sweden’s krona strengthened versus the euro.
“It’s all negatives just lined up” for the euro, said Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon Corp. in London. “It’s not clear how the vote is going to go and I’m not convinced that should the vote be carried, it would be positive for Greece and the euro zone.”
The euro weakened 0.4 percent to $1.2787 at 7:08 a.m. New York time after dropping to $1.2778, the lowest level since Sept. 11. The common currency fell 0.6 percent to 102.58 yen after sliding 0.5 percent on Nov. 2. The yen appreciated 0.3 percent to 80.22 per dollar.
Europe’s currency is “likely” to extend its decline to $1.2730, Bank of New York’s Mellor said.
Greek society won’t tolerate any more austerity measures, Samaras told lawmakers of his New Democracy Party in Athens, as coalition leader debate the terms of the latest package. The first parliamentary vote on measures needed to obtain additional aid is scheduled to take place as early as Nov. 7.
“The market is increasingly losing confidence that Greece might get its extended bailout money because the governing coalition is unraveling or disagreeing more and more,” said Imre Speizer, an Auckland-based strategist at Westpac Banking Corp. “We’ve seen the euro fall and it looks like it wants to go lower.”
The euro has weakened 3 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The yen has dropped 6.1 percent, the worst performer, and the dollar declined 1.5 percent.
The U.S. currency rose against 13 of its 16 major peers on speculation the winner of this week’s presidential election will press ahead with plans to curtail the nation’s deficit.
Employment and the economy are central themes before tomorrow’s vote, with President Barack Obama and Republican nominee Mitt Romney each trying to convince voters he can best energize the economic expansion.
“The U.S. election is becoming a positive for the dollar,” said Mellor. “The deficit is too big for any flexibility on either side. It’s got to be reduced, so that’s out of the equation.”
The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six major trading partners, gained 0.2 percent to 80.75. The gauge rose above its 200-day moving average, currently at 80.67, for the first time since Sept. 7.
The pound declined for a second day versus the dollar after an industry report showed U.K. services growth slowed more in October than economists forecast.
Sterling fell before the Bank of England holds a two-day meeting this week to decide whether to increase monetary stimulus through so-called quantitative easing.
“The U.K data seems to have knocked sterling this morning but I’d be wary of further weakness,” said Michael Derks, chief strategist at FXPro Group Ltd. in London. “The hurdle for more QE is reasonably high.”
The U.K. currency dropped 0.3 percent to $1.5978 after falling to $1.5962, the lowest since Oct. 24. The pound was little changed at 80.04 pence per euro.
The krona strengthened against the euro after service production in the Scandinavian nation rose to 50.3 in October from a revised 47.2 the previous month. A reading above 50 signals an expansion.
The krona rose 0.4 percent to 8.5758 per euro. Sweden’s currency was little changed versus the dollar to 6.7073.
The Turkish lira strengthened after the nation received its first investment-grade ranking since 1994. Fitch Ratings raised the country by one level to BBB-, citing an easing in economic risk and lower government debt.
The lira climbed 0.6 percent to 1.7824 per dollar, and gained 0.9 percent to 2.2793 against the euro. It has risen for 10 days versus the euro, the longest streak since the single currency was introduced in 1999.