The euro touched two-month lows against the dollar and Swiss franc as European finance ministers struggled to agree on how to provide additional aid for Greece.
The 17-nation currency erased losses versus the greenback as U.S. stocks rose amid an increase in risk appetite. New Zealand’s dollar declined after retail sales unexpectedly fell. The yen gained against most major peers after euro-area policy makers said they would give Greece two extra years to lower its budget deficit. Brazil’s real slid on bets the central bank will continue intervening to weaken it.
“Greece expectations have been priced in and are weighing on the euro,” said Dan Hwang, the New York-based chief currency trader for Gallant Capital Markets, an online foreign-exchange brokerage. “The euro-dollar should continue trading between the 100- and 200-day moving average for the next couple of weeks until the next tranche of aid.”
The euro was little changed at $1.2704 at 5 p.m. New York time after touching $1.2662 earlier, the weakest level since Sept. 7. Its 100-day moving average is $1.2644, and the 200-day average is $1.2815. The shared currency declined 0.2 percent to 100.84 yen, weakening for a fifth day. The Japanese currency appreciated 0.2 percent to 79.38 per dollar.
The seven-day relative strength index for the euro versus the dollar was 18.9. A reading below 30 indicates an asset may have fallen too far, too quickly, and be due for a correction.
The euro reversed losses as the Standard & Poor’s 500 (SPX) Index rose as much as 0.6 percent when Home Depot Inc. led a rally in retailers after reporting better-than-forecast earnings. The gauge later erased gains to end the day down 0.4 percent.
New Zealand’s dollar, nicknamed the kiwi, advanced against all of its 16 most-traded counterparts tracked by Bloomberg before erasing gains as retail sales adjusted for inflation declined 0.4 percent in the third quarter, versus a Bloomberg News survey’s forecast for a 0.4 percent gain. The kiwi weakened 0.2 percent to 81.60 U.S. cents.
Europe’s common currency has lost 6.3 percent in the past 12 months, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen slid 2 percent, and the dollar rose 1.3 percent.
Euro-area finance ministers will reconvene next week in an “extraordinary meeting” to discuss Greece’s financing needs, according to a statement read out by Luxembourg Prime Minister Jean-Claude Juncker at the conclusion of a gathering in Brussels late yesterday. International Monetary Fund Managing Director Christine Lagarde said after the meeting Greece’s creditors had “different views.”
The finance ministers put off until Nov. 20 a decision on how to cover additional Greek needs of as much as 32.6 billion euros ($41 billion). Lagarde disagreed with a decision by the officials to postpone the goal of getting Greece’s debt down to 120 percent of GDP by two years, until 2022.
“Greece has not really gone away,” Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. (8411) in New York, said in an interview. “They’re still trying to chip away with their austerity measures. But if you don’t get the red headlines that it’s deteriorating for the moment, you see that as an improvement.”
A gauge of German investor sentiment unexpectedly fell. The ZEW Center for European Economic Research in Mannheim said its index of investor confidence, which is designed to predict economic developments six months in advance, dropped to minus 15.7, from minus 11.5 in October. Economists in a Bloomberg News survey forecast an increase to minus 10.
Switzerland’s franc appreciated 0.1 percent to 1.2036 per euro, the strongest level since Sept. 12.
ICAP Plc’s EBS electronic foreign-exchange platform will reduce the number of intervals at which participants can trade the Swiss franc against the euro to “discourage disruptive behavior.”
Traders will only be able to exchange the currency at so- called half pips, or intervals of 0.00005, from Nov. 26, instead of trading at 0.00001 steps, or “tenths”, EBS said in a statement distributed by e-mail today.
Brazil’s real weakened for a fifth day versus the dollar in its longest stretch of losses since August on speculation the central bank will continue to intervene.
The real fell 0.4 percent to 2.0584 to the greenback and touched 2.0741, the weakest level since June 28. Brazil’s central bank has sold reverse currency swaps to keep the real weaker than 2 per dollar to support exporters. It sold $1.4 billion of contracts Oct. 25, $1.6 billion Oct. 23, $1.3 billion Oct. 5, $5.7 billion Sept. 12 through Sept. 17 and $350 million Aug. 21. The August reverse swaps were the first since March.
The Australian dollar may weaken to its lowest level since Oct. 8 after it was unable to advance beyond the resistance area from $1.0475 to $1.0480 last week, Niall O’Connor, a New York- based technical analyst at JPMorgan Chase & Co., wrote today in a client note. If the currency falls below key support levels of $1.0328 and $1.0355, it may depreciate to $1.0149, he said.
Resistance is an area on a chart where sell orders may be clustered, and support is an area where there may be buy orders.
The Aussie dollar was little changed against its U.S. counterpart at $1.0435.
Implied volatility among major currencies, which signals the expected pace of price swings, fell to 7.24 percent, according to a JPMorgan Chase & Co. gauge of Group-of-Seven currencies. That’s the lowest since October 2007. Traditionally, when volatility declines, riskier currencies appreciate. The five-year average is 12.36 percent.
The pound advanced versus most major peers after a report showed U.K. inflation accelerated more than economists forecast in October. Britain’s currency gained as much as 0.4 percent to 79.70 pence per euro before trading little changed at 80.05 pence. It traded against the greenback at $1.5871.
U.K. consumer prices rose 2.7 percent from a year earlier, compared with 2.2 percent in September, the Office for National Statistics said in London today. Inflation was forecast to quicken to 2.4 percent, based on the median of 36 estimates in a Bloomberg News survey.
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