BL: Euro Falls a 3rd Day on Concerns About Regional Growth, Greece
By Ron Harui
Feb. 12 (Bloomberg) -- The euro fell for a third day against the yen and the dollar before a report that economists said will show growth in the 16-nation euro-zone slowed last quarter, damping demand for the region’s assets.
The euro weakened versus 14 of its 16 major counterparts on concern the European Union’s plan to assist Greece will fall short of helping the nation tackle its fiscal deficit. The yen rose for a second day against the dollar on speculation Japanese investors are repatriating overseas earnings before an estimated $48.3 billion of U.S. Treasuries mature next week.
“The euro-zone’s fourth-quarter gross domestic product data is expected to show only moderate growth,” said Akane Vallery Uchida, a currency strategist at Royal Bank of Scotland Group Plc in Tokyo. “This is likely to add to the downward pressure on the euro.”
The euro declined to 122.46 yen as of 1:35 p.m. in Tokyo from 122.90 in New York. Europe’s currency fell to $1.3668 from $1.3693 yesterday, when it dropped to $1.3596, the lowest level since Feb. 5. The yen climbed to 89.60 per dollar from 89.77.
Europe’s currency headed for a fifth weekly loss versus the dollar before the EU’s statistics office releases its gross domestic product report today. GDP growth in the euro-zone slowed to 0.3 percent last quarter from 0.4 percent in the prior three months, according to a Bloomberg News survey.
Production Falls
Industrial production in France and Italy unexpectedly declined in December, government reports showed this week. French industrial output fell 0.1 percent from November, and Italian output declined 0.7 percent.
EU leaders stopped short of offering concrete steps to help Greece following their summit in Brussels yesterday.
Their statements left open how the EU would respond to a fresh wave of speculative attacks against the bonds of Greece or countries such as Spain and Portugal, which are also struggling to cut their deficits. The EU plan, brokered by German Chancellor Angela Merkel, Greek Prime Minister George Papandreou and European Central Bank President Jean-Claude Trichet, called for closer monitoring of the Greek economy.
“The lack of detail and substance in the assistance plans for Greece are a disappointment,” said Danica Hampton, senior strategist for markets at Bank of New Zealand Ltd. in Wellington. “This sentiment may continue to weigh on the euro.”
Annual Loss
The common currency has fallen 4.5 percent against the dollar this year on concern nations with the biggest debt burdens will struggle to meet their obligations. Investor attention now turns to a meeting of finance ministers in Brussels on Feb. 15-16.
Greece, representing 2.7 percent of the trading bloc’s $13 trillion economy, posted a budget deficit of 12.7 percent of gross domestic product in 2009, more than four times the EU’s 3 percent limit.
The yen rose against all 16 major currencies as the U.S. prepared to pay $48.3 billion in redemption and $21.6 billion in coupon payments for Treasuries on Feb. 16, according to estimates by Stone & McCarthy Research Associates.
Japan’s investors sold 32.4 billion yen ($361.6 million) more in overseas bonds and notes than they bought during the week ended Feb. 5, the Ministry of Finance said today.
“Japanese investors are probably repatriating money on worries over Greece,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “There’s also talk they are bringing back some coupon payments in U.S. Treasuries.”
Pound May Fall
The pound may weaken against the yen, extending its decline toward the lowest level in 10 months, Ueda Harlow Ltd. said, citing trading patterns.
Britain’s currency failed to break so-called resistance near the conversion line of an ichimoku chart against the yen, signaling its will resume a downtrend, said Toshiya Yamauchi, manager of foreign-exchange margin trading at Ueda Harlow in Tokyo. Resistance is a level where sell orders may be clustered.
“The key is whether it can protect the low reached on February 5,” Yamauchi said. “If this level is breached, the pound may extend its decline to about 135.70 yen.”
The pound dropped to 138.26 yen on Feb. 5, the weakest since March 30. It traded at 140.49 yen from 140.96 yen.
To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.net
Last Updated: February 11, 2010 23:41 EST
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