Euro drops to eight-week low on Greece aid concern; pound falls

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.

‘Losing Confidence’

“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.

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