FOREX-Euro slides broadly, weighed by Greece concerns

* Euro suffers on Greek CDS rise, bond yield spreads widen

* Euro falls 1 pct on day vs yen, hits week’s low vs dollar

* Dollar recovers from early losses on strong China GDP

(Adds comment, updates throughout)

By Naomi Tajitsu

LONDON, April 15 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) against the
dollar and the yen on Thursday as higher costs to insure against
a Greek default highlighted persistent concerns about Greece’s
debt problems and cut demand for risky assets.

“Greek/German spreads are pushing around 400 basis points,”
said Jeremy Stretch, strategist at Rabobank in London.
“Investors may be shy of taking on risk, and so we’re seeing
selling in euro/dollar.”

Five-year Greek credit default swap prices rose to 455 basis
points, exceeding a record closing high of 444 basis points hit
a week ago, before euro zone members agreed a standby aid
package to help Athens service its mounting debt.

The yield spread between Greek and German government bonds
also widened to around 406 basis points, with investors
demanding a higher premium on Greek debt as they clamour for
clarity about how the financial assistance would be implemented.

By 0949 GMT, the euro (EUR=: ) had fallen nearly a full
percent on the day to $1.3520, its lowest of the week. The
single currency traded more than a full U.S. cent below the
day’s high of $1.3666.

Against the yen, the euro (EURJPY=R: ) fell more than 1
percent to 125.84 yen, with traders citing selling by U.S.
investment banks.

Some in the market said selling by Middle Eastern names was
helping to push the euro lower against the dollar, and that
breakthrough stop-loss orders around $1.3575 and below had
exacerbated losses.

Thursday’s slide further narrowed a gap to $1.3500, last
Friday’s closing level, according to Reuters charts, which had
been providing support to the euro earlier in the week.

The euro pulled further away from a three-week high around
$1.3691 hit early this week after the Greek aid agreement was
announced, and analysts said any rise in the euro would be seen
as a chance to sell, given ongoing concerns about Greece.

“Were it not for Greece, the global growth/commodity story
would probably have seen EUR/USD pushing up to $1.38/40,”
analysts at ING said in a research note.

“However, Greece remains a genuine concern for investors in
euro debt and any recovery in EUR/USD to $1.37/38 looks a sell.”
The dollar (.DXY: ) rose 0.6 percent against a currency basket
to 80.700, recovering from a four-week low of 80.031 hit on

It was slightly lower against the yen (JPY=: ) at 93.08 yen.


The dollar recovered from earlier losses triggered after
strong Chinese economic data ramped up speculation of a yuan
revaluation, which is seen as negative for the dollar.

Data earlier on Thursday showed China’s economic growth
accelerated in the first quarter to 11.9 percent, the fastest
annual pace in nearly three years, and consumer price inflation
in March decelerated. [ID:nBJL002018]

The overall reaction to the Chinese data was subdued as the
jump in growth had matched indications released by sources.

Still, analysts said improvement in the Chinese economy
would bolster the argument for a strong yuan, and that the
exchange rate may soon be freed up to some extent. Such a move
is seen boosting Asian currencies to the detriment of the

“The data was another piece of the revaluation puzzle,” said
Sven Schubert, currency analyst at Credit Suisse in Zurich.

“Our expectations are for a revaluation around mid-year, but
now we see a risk of this happening earlier in the second

He added that the dollar may also struggle in coming months
if the Federal Reserve sticks to its position that U.S. interest
rates will stay low for an extended period, a view reiterated by
Fed Chairman Ben Bernanke on Wednesday. [nFEDAHEAD]

Growth Stocks

(Editing by Susan Fenton)

FOREX-Euro slides broadly, weighed by Greece concerns