The euro tumbled against most major counterparts in European trading as sentiment went back to bearish ahead of a weekend full of uncertainty regarding the Greek debt deal. After being boosted to a two-month high against the dollar on Thursday by news that Greece reached an agreement on the austerity plan that will allow them to receive a 130 billion euro bailout, the Eurogroup meeting last night deflated euphoria.
Eurogroup chief Jean-Claude Juncker said that before a disbursement of bailout funds, there must first be implementation of the plan. This means that Athens must first ratify the plan in parliament by this weekend. Also, a further 325 million euros of spending cuts needs to be found before the next Eurogroup meeting on February 15.
What accelerated the euro’s fall today were comments from a Greek party leader, Georgios Karatzaferis saying he cannot back up such an austerity plan. This may take Greece back to the drawing board. Meanwhile Greek union workers are on a 48 hour strike.
EURUSD plummeted to a low of 1.3166. Earlier in the session it had reached 1.3256. EURGBP fell to 0.8349 from 0.8405. EURJPY slid to 102.30 from 103.18.
Sterling gave up all gains made against the dollar after tracking losses in EURUSD. Earlier in the London session, GBPUSD was lifted to 1.5848 from 1.5765 on the view that the UK economic outlook is improving. Data today showed UK factory gate inflation dropped to its lowest in more than a year in January. Reduced inflation could help real UK yields rise, further supporting the pound. However, domestic fundamentals were overshadowed by headlines from Europe, as Greece dominated the markets today. As risk appetite was hurt, sterling reversed direction and fell to 1.5757.
The US dollar strengthened against all but one of its 16 major peers as damp risk sentiment boosted demand for the global reserve currency. USDJPY climbed to 77.80, recording a steady rise all week. USDCHF soared to 0.9184 from 0.9101.
The risk-sensitive Australian dollar was the worst performing currency today as the euro zone debt concerns pressured the currency as well as a dovish RBA quarterly statement released this morning. AUDUSD fell to 1.0638 in Europe from early Asian trading high of 1.0789.