Reuters: US Dollar Report: FOREX-Euro shaky on Greece exit fear, near 22-month low

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-Euro shaky on Greece exit fear, near 22-month low May 24th 2012, 06:06 Thu May 24, 2012 2:06am EDT * Fears of messy Greek exit from euro zone persist * EU leaders offer no comfort * Subdued reaction to decline in China factory activity in May By Masayuki Kitano and Ian Chua SINGAPORE/SYDNEY, May 24 (Reuters) - The euro hovered just above its 22-month low against the dollar on Thursday and remained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors on tenterhooks. The euro eased 0.1 percent to $1.2574. It fell to about $1.2545 the previous day, its lowest level since July 2010. That level should provide initial support, followed by $1.2500. The euro drew little comfort from an informal summit of European Union leaders that shed no new light on how the euro zone nations intend to tackle its debt crisis, including the threat of Greece's exit from euro. "It's still hard to see what the endgame will be like," a trader at a Japanese bank in Tokyo said. European Union leaders urged Greece to stay the course on austerity and complete the reforms demanded under its bailout programme. Three officials told Reuters that members of the currency bloc have been warned to prepare contingency plans in case Greece quits the euro, an eventuality that the German central bank said would be testing, but "manageable". "With a Greek exit once again being discussed, the pressure on the euro should continue especially with the lack of clarity on any of the pressing issues," analysts at BNP Paribas wrote in a client note. "EUR weakness is likely to be amplified against the USD and the JPY as the market seeks refuge (in the safe-haven pair) as negative risk sentiment persists." The next major support level for the euro is seen at $1.2500, although some market players say the single currency is at risk of an even steeper drop. Daisuke Karakama, market economist at Mizuho Corporate Bank in Tokyo, said the euro may drop to $1.20 by the end of June. The $1.20 level is key for the euro because the $1.20 to $1.22 range is seen as being roughly consistent with purchasing power parity, Karakama said. In the past, there have been cases where the euro's drop versus the dollar have stalled near levels consistent with purchasing power parity, he added. "One point to watch will be whether the euro can break below such levels," Karakama said. With the euro under pressure, the safe-haven dollar held its ground. Against a basket of major currencies, the dollar stood at 82.086 . That was close to a peak of 82.221 hit on Wednesday, the dollar's highest level since September 2010. The dollar held steady against the yen at 79.50 yen. Data showing that China's factories faltered in May had limited impact on major currencies, as market players had been expecting a weak reading. The Australian dollar inched up 0.1 percent to $0.9759 , staying above a six-month low of $0.9690 hit on Wednesday. In the wake of its recent sharp falls, the Aussie dollar faces a further test over Thursday and Friday, when around A$600 million of uridashi bonds are due to be redeemed. Uridashi bonds are foreign currency debt sold in Japan primarily to households. The risk is that Japanese holders of such bonds may convert some proceeds from the bond redemptions back into the yen, although they might also roll their funds into other Australian dollar assets. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions