ECONOMY

Euro falls as concerns over Greece flare up

The euro hit a two-week low against the dollar and fell against the yen on Friday, with traders citing concerns that Greece may miss its austerity targets and political uncertainty in Athens.

A report from the International Monetary Fund said Greek debt would be above the target agreed with international lenders, while the Greek government said a deal on Athens’s latest austerity package was being held up by opposition from a coalition ally.

The euro fell 0.3 percent to $1.2893, retreating from its Oct. 17 high of $1.3140. It also dropped 1 percent against the safe haven yen to 102.725 yen, a 10-day low.

The outlook for the euro was also clouded by uncertainty about when Spain will request a bailout that could trigger the European Central Bank’s bond-buying program.

“People are still concerned about Spain asking for a bailout and Greece remains a problem too. I remain bearish on the euro,» said Lutz Karpowitz, FX strategist at Commerzbank.

The euro has struggled this week on grim economic data and fresh signs that the region’s powerhouse, Germany, is struggling.

Traders said the single currency was likely to be caught in a $1.2800/1.3200 range until Spain asks for aid. Offers were cited around $1.2960 and above $1.3000.

Options market activity also suggested the euro was likely to stay in a range against the dollar in the near term. One-month implied volatility was at 8.05 vols, near levels last seen in late 2007. [Reuters]