Bloomberg News

Euro Set for 3rd Weekly Drop as EU Discusses Greece Financing

June 23, 2011

June 24 (Bloomberg) -- The euro was set for a third weekly decline against the dollar, the longest streak in four months, before European Union leaders conclude a summit in Brussels today on financing needs for debt-saddled Greece.

The shared currency depreciated against most of its major peers this week before a report that economists say will show German business confidence fell. The dollar was poised for its first weekly gain versus the yen in five before U.S. data economists say will show orders for durable and capital goods increased in May.

“On a six-month view I’m looking for much lower levels in the euro,” said Michael McCarthy, the Sydney-based chief market strategist at CMC Markets. “On the Greek situation, one of the problems for markets is that the solution is going to take months and years to come through.”

The euro traded at $1.4275 as of 8:20 a.m. in Tokyo from $1.4256 in New York yesterday, set for a 0.2 percent weekly decline. The common currency was at 114.83 yen from 114.78 yen. The dollar bought 80.44 yen from 80.51 yen, poised for a 0.5 percent climb this week.

European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. EU leaders urged Greece to pass a package of budget cuts and vowed to do what’s needed to meet the country’s financing needs, the EU said in a statement in Brussels yesterday.

German Confidence

The Ifo institute’s German business climate index for June, based on a survey of 7,000 executives, declined to the lowest level since October, the median estimate of economists surveyed by Bloomberg News showed before the data’s release today.

U.S. orders for durable goods, those designed to last at least three years, increased 1.5 percent in May after dropping 3.6 percent the prior month, economists surveyed by Bloomberg said ahead of the Commerce Department data. Bookings for non- defense capital goods excluding aircraft gained 1 percent last month after falling in April, a separate survey showed.

The Federal Reserve decided on June 22 to keep the central bank’s balance sheet at a record to support an economic recovery after completing $600 billion of bond purchases this month.

“What we’re seeing is a recovery in the U.S. economy and at some stage the huge stimulus will be withdrawn,” said CMC’s McCarthy. “The risks in the dollar now go to the upside.”

--Editors: Rocky Swift, Nicholas Reynolds

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.


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