Daily Forex Round-Up: Greek Uncertainty Starting to Weigh on the Euro (EUR)

on Nov 26, 2012
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On November 26, the markets were focused on the outcome of the Greek funding discussions, with investors expressing caution, which weighed on the single currency as well as on the pound. The yen, however, was boosted by appetite for haven assets and rose against all of its major counterparts, as reported by Bloomberg.

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**The Single Currency Falls With Ministers Debating Greece**
Reuters reports that the euro declined 0.2 percent against the US dollar following strong gains seen over the past week with investors pricing in the likelihood of a Greek deal. “Last week was very good for the markets and it seems that investors are taking a breather ahead of the euro zone meeting,” noted Koen De Leus, senior economist at KBC.

Bloomberg reports that the single currency also lost 0.5 percent versus the yen. “Today is critical in terms of reaching the agreement, which is not very much expected,” commented Vassili Serebriakov, a currency strategist at BNP Paribas SA (EPA:BNP), as quoted by Bloomberg. “What’s interesting with the euro is how it’s shown resilience to bad news.”

The Eurozone finance ministers started their meeting about Greece’s additional funding less than a week after failing to reach an agreement. “The market is probably set up for something fairly decisive today (on Greece),” notes Adam Cole, global head of FX strategy at RBC Capital Markets, as quoted by Reuters. “If they fail to agree yet again it could be quite violently negative.” Bloomberg in turn quotes the French Finance Minister Pierre Moscovici as saying that failure to reach an accord would be irresponsible “given all the efforts that have been made.”

**Greek Concerns Weighing on the Pound**
Greece-related uncertainty also dragged the pound down, with Bloomberg reporting that the sterling slipped from a three-week high versus the greenback, losing 0.1 percent to $1.6010 as of 1:41 p.m. GMT. “For today the pound will just be driven by euro-group chatter this morning and any fiscal-cliff headlines this afternoon as talks start in earnest,” notes Christian Lawrence, a currency strategist at Rabobank International, as quoted by Bloomberg, adding that a signal that Eurozone ministers are moving closer to a Greece deal should push the pound higher against the dollar and weaker against the euro. Today, the pound traded at 80.96 pence per euro, after reaching 81.09 pence on November 23, the weakest since October 24.

**Yen Benefits from Safe Assets Demand**
!m[](/uploads/story/901/thumbs/pic1_inline.png)The Japanese yen strengthened versus all of its 16 major counterparts, with a decline in global stocks boosting demand for safer assets. Japan’s currency gained 0.3 percent to 82.11 per dollar, with Bloomberg quoting Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd, as seeing risk of a “near-term correction” on account of the “somewhat excessive” scale of yen-selling in November.
**Loonie Loses Ground**
Canada’s dollar, which last week benefitted from the consideration of the International Monetary Fund (IMF) to list it separately as a reserve asset together with the Australian dollar, fell against all its major counterparts on account of fiscal cliff and Greece-related concerns. Bloomberg reports that the loonie declined 0.2 percent to trade at 99.46 cents per US dollar.

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