Euro Declines On Greek Exit Fears
Canbera-Australia (Feb 9) The euro fell against its major counterparts on Monday's European deals, as investors became nervous about the future of Greece's membership in the euro area, after Greek Prime Minister Alexis Tsipras rejected an extension to his country's current bailout package, adopting harder stance with his European partners.
Greek Prime Minister Alexis Tsipras reaffirmed at the weekend that his government do not want an extension of a stringent bailout program and instead seek a bridge loan.
Market participants are worried that Tsipras' harsh tone with its creditors by proclaiming an end to austerity and refusal of bailout may affect Greece's future in the Eurozone.
Moody's Investors Service on Friday placed its 'Caa1' rating on Greek government debt on review for a possible downgrade, citing high uncertainty about the country's talks with its official creditors.
The move came shortly after Standard & Poor's downgraded its rating further into junk status with a negative outlook, saying its limited cash buffers and approaching debt redemptions to official preferred creditors constrain its negotiating flexibility.
Meanwhile, survey data from the think tank Sentix showed that Eurozone investor sentiment rose sharply to the highest since May 2014 on the back of quantitative easing announced by the European Central Bank .
The investor confidence index for February rose to 12.4 from 0.9 in January. This was the highest score since May 2014 and far exceeded an expected score of 3.
Moving away from an early high of 134.98 against the yen, the European currency ticked down by 0.8% to 133.88. The next possible downside target for the euro-yen pair is seen around the 132.5 zone.
Data from the Cabinet Office showed that confidence among Japanese consumers improved for the second straight month in January, but by less than expected.
The consumer confidence index rose by 0.3 points to 39.1 in January from 38.8 in the previous month. Economists had forecast a 39.3 score for the month.
The euro fell back to 1.1296 against the greenback, heading to pierce its early weekly low of 1.1295. If the euro-greenback pair continues its slide, it may locate 1.10 as next support level.
The 19-nation currency pared gains to 1.0463 against the franc and 0.7428 against the pound, from early highs of 1.0531 and 0.7458, respectively. On the downside, the euro may challenge support around 1.025 against the franc and 0.725 against the pound.
The single currency drifted lower to near 2-week lows of 1.5246 against NZ dollar and 1.4463 against the aussie, pulling away from highs of 1.5408 and 1.4608, respectively hit in previous deals. Continuation of the euro's downtrend is likely to lead it to support levels of around 1.50 against the kiwi and 1.42 against the aussie.
The euro, having advanced to 1.4262 versus the loonie earlier, edged down to 1.4125 in European deals. Next key support for the euro-loonie pair is seen around the 1.40 region.
Looking ahead, Canada housing starts data for January is due in the New York session.