Euro weakens before Samaras meets Greece’s creditors
The euro declined, snapping a three-day advance, amid renewed concerns about the region?s debt woes before Greece?s Prime Minister Antonis Samaras meets officials from the nation?s creditors.
The common currency slid against most of its 16 major peers after Samaras failed to secure agreement from his coalition partners on 11.5 billion euros ($14.7 billion) of spending cuts required by lenders to his country. The Dollar Index was 0.2 percent from a four-month low after a report last week showed US jobs growth slowed, boosting speculation the Federal Reserve will undertake a third round of bond buying.
?I see a decline in the euro in the medium-to-long term,? said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan?s third-largest bank by market value. ?There will be countries in the euro region that can?t make much progress in deficit reduction or fiscal consolidation.?
The 17-nation euro lost 0.2 percent to $1.2786 as of 6:54 a.m. in London after rising 2 percent over the past three days. It fell 0.2 percent to 100.03 yen. The dollar was unchanged at 78.24 yen after dropping 0.8 percent on Sept. 7.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, was little changed at 80.288. It fell to 80.151 on Sept. 7, a level unseen since May 11.
Samaras is due to meet officials from the euro area, the European Central Bank and International Monetary Fund Monday.
Greece?s Democratic Left leader Fotis Kouvelis, whose party is one of the three in the coalition government, said no decision had been made on spending cuts and that poorer Greeks must be protected from austerity measures. The three leaders agreed to meet again on Sept. 12, two days before euro-area finance ministers meet to be briefed on Greek progress.
Germany?s Federal Constitutional Court is due to rule on Sept. 12 on the country?s participation in the European Stability Mechanism, a permanent 500 billion-euro fund that offers loans to member states and may buy their bonds to lower borrowing costs. Germany is the region?s largest economy and will be the biggest contributor to the fund with a 27 percent share, a statement from the European Commission shows.
The euro has fallen 3.5 percent this year, the second-worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has dropped 3.9 percent, while the dollar has declined 2 percent.
Demand for the dollar was limited before a Commerce Department report due Tuesday that economists surveyed by Bloomberg News say will show the US trade deficit widened to $44.4 billion in July from $42.9 billion in June.
Labor Department figures showed on Sept. 7 that nonfarm payrolls increased by 96,000 in August, down from a revised 141,000 the previous month. The unemployment rate was 8.1 percent, compared with 8.3 percent in July.
Fed Chairman Ben S. Bernanke said on Aug. 31 at an economic summit in the Jackson Hole, Wyoming, that weak hiring and unemployment exceeding 8 percent posed a ?grave concern.?
Bernanke said bond purchases are an option as central bankers weigh further steps to spur growth on top of the $2.3 trillion in quantitative easing implemented since 2008. The Fed will start a two-day policy meeting on Sept. 12.
?The market is right to anticipate that there will be another round of asset purchases? by the Fed, said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, Australia?s second-biggest lender. ?It?s looking increasingly likely and that?s a negative for the US dollar.?
The dollar may test its June low against the yen should it break its recent range of 78 yen to 79, Marc Chandler, global head of currency strategy at Brown Brothers Harriman
