Forex Market Review – Euro tumbles ahead of Greek parliament vote on austerity

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Greece dominated the news again today causing euro and most risk currencies to tumble. Dollar, which is perceived as a safe haven, regained recent losses as investors turned to the global reserve currency.

 

EURUSD plunged in early New York trading hours down to 1.3154. The single currency had been sliding all day from the Asian session high of 1.3289. On Thursday, the pair hit a two-month high of 1.3319 in reaction to news that the Greek government had reached a deal on austerity measures required to receive a bailout from international lenders in order to aver a default.

 

However, when presented to the Eurogroup in Brussels at a meeting of euro zone finance ministers late Thursday, Greece was told that the disbursement of the second bailout package will have to be delayed until Athens ratifies the deal in parliament over the weekend. Then the Eurogroup will reconvene next week on the 15th to sign off on the bailout agreement assuming the Greek parliament votes on it. Should the deal not pass, then Greece will default by mid-March.

 

EURJPY fell to 102.14 in US trading versus the Thursday high of 103.27.

 

Sterling fell sharply against the dollar on Greek debt concerns, falling to 1.5728 from the day high of 1.5848.

 

Commodity-linked currencies like the Canadian suffered losses as it tends to be risk-sensitive. The Canadian dollar weakened against the greenback despite data showing that Canada’s trade surplus unexpectedly rose to a three-year high in December. USDCAD rose to 1.0037 in the US session, climbing all day from the Asian open price of 0.9943.

 

USDJPY mostly consolidated gains today, but did hit a higher level than yesterday at 77.80.