Forex Market Review – Euro slips on Greek debt concerns

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The euro slid off a three week high against the dollar as Asian markets took the opportunity to book profits after a strong rally on Monday. The European Finance ministers meeting (ECOFIN) in Brussels last night disappointed. Talks on Greek debt restructuring suffered another major setback, raising concerns of default.   There is disagreement between the Greek government and its creditors over what coupon rate creditors should receive on planned new bonds.

 

The single currency took another blow after a report rekindled fears that Portugal, seen as the second most risky country in the euro zone, could be the next potential default candidate after Greece.

 

EURUSD opened in Asia at 1.3011and edged down to a session low of 1.2986 before turning back up. The focus turns to another day of ECOFIN meetings later today.

 

Against the yen, the euro retreated from a four-week high of 100.47 that was reached on Monday. EURJPY touched a low of 100.01 but remained steady.  Meanwhile, the yen was little changed versus the dollar after the Bank of Japan cut its economic growth forecast for next year to 2 percent from 2.2 percent projected in October as it held its key rate near zero.  USDJPY was range bound hovering in the lower 77s.

 

The Australian dollar slid off a 12-week high against the US dollar. The aussie reached overbought status and after a sharp rise it is normal to fall on profit-taking.  AUDUSD weakened 0.8 percent to 1.0482 from yesterday, when it touched 1.0571, the highest since October 31.

 

The euro’s retreat helped lift the dollar off a three-week low of 79.602 hit on Monday to rise to 79.849. The focus is on a two-day meeting of the U.S. Federal Open Market Committee starting today. Some speculate there will be further easing by the Federal Reserve.