The euro fell for the first time in six days against the yen as European Union finance ministers gathered for a third meeting this month to try to reach agreement on aid for Greece.
The 17-nation currency dropped from a three-week high versus the dollar after pro-independence parties in Spain’s Catalonia won a majority in a regional election, underpinning a drive for a referendum on secession. The yen rose against all of its 16 major counterparts as a decline in global stocks boosted demand for safer assets and after a technical indicator signaled its recent slide was excessive.
“Today is critical in terms of reaching the agreement, which is not very much expected,” said Vassili Serebriakov, a currency strategist at BNP Paribas SA in New York. “What’s interesting with the euro is how it’s shown resilience to bad news.”
The euro declined 0.5 percent to 106.44 yen at 9:34 a.m. in New York after rising to 107.14 yen, the highest level since April 27. The single currency fell 0.1 percent to $1.2962 after climbing to $1.2991 on Nov. 23, the strongest since Oct. 31. The yen gained 0.3 percent to 82.11 per dollar.
Canada’s dollar fell against all its major counterparts, declining from almost a two-week high versus its U.S. peer as risk appetite waned. The Canadian currency, known as the loonie, weakened 0.2 percent to 99.46 cents per U.S. dollar.
Reserve Currency
The currency got a boost last week after the International Monetary Fund’s move to deem the Australian and Canadian dollars reserve assets, bolstering demand even as the commodity boom that drove the currencies to the strongest since at least 2007 loses steam. The loonie added 0.8 percent last week, the most since the five days ended Aug. 10.
Finance chiefs from the single-currency bloc started their meeting at 12:30 p.m. in Brussels, less than a week after an all-night gathering failed to yield agreement and days after a European Union summit broke up without a proposed seven-year budget. At stake is the continuation of a three-year mission to return Greece to financial health.
“It would be irresponsible not to reach an accord given all the efforts that have been made,” French Finance Minister Pierre Moscovici said yesterday on BFM television.
A solution is hung up on politics in Germany, the dominant country in Europe’s crisis management, where Chancellor Angela Merkel is campaigning for a third term next year on the pledge that Greece won’t cost taxpayers an additional cent.
“It seems a final agreement for Greece is very close although this is another measure which kicks the can down the road,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.
Catalan President Artur Mas, who called early elections to force the debate on independence, won 50 of the 135 seats in the regional assembly for his Convergencia i Unio party, down from 62. The separatist Catalan Republican Left, known as the ERC, more than doubled its seats to 21 from 10. Two smaller parties that also back a plebiscite secured 16 seats.
The euro has weakened 2.2 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar dropped 2.2 percent, and the yen slid 9.1 percent.
“We see relative stability for the euro into year-end,” Hardman said, “while the scale of yen selling has been somewhat excessive this month and there is risk of a near-term correction.”
Japan’s currency rallied today as the Stoxx Europe 600 Index of shares slid 0.6 percent and futures on the Standard & Poor’s 500 Index dropped 0.4 percent.
Recessionary Phase
The 14-day relative strength index for the yen against the dollar dropped to 25 at the end of last week, below the level of 30 that is considered a sign an asset’s decline has been too rapid. Japan’s currency had slumped 3.5 percent versus the dollar during the previous two weeks.
Minutes of the Bank of Japan’s Oct. 30 meeting released today showed a few members of the policy board said the economy entered a recessionary phase, while one indicated the need for new ways to boost price expectations. The BOJ last month increased asset purchases by 11 trillion yen, announced a new lending program and signed a joint statement with the government on ending deflation.
