FOREX-Euro slides on persistent Greek woes; US dollar rises

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 12 (BestGrowthStock) – The euro plunged to a nearly
nine-month low against the dollar on Friday after a rescue deal
for debt-stricken Greece left many details unanswered, while
China’s surprise monetary tightening hit higher-yielding

The Chinese central bank’s move to raise commercial banks’
reserve requirements hurt risk-taking on the view it may choke
economic recovery. [ID:nTOE61B069] The move pushed the dollar
index to a seven-month high and pressured the Australian dollar
across the board.

In the euro zone, the European Union on Thursday offered
its support to help Athens rein in its deficits, but a lack of
detail on its pledge kept investors jittery. That resulted in
widening yield spreads between benchmark government bonds in
Greece and Germany — widely considered the safest in the euro

“The Greece situation is still weighing on the euro.
Markets were hoping for large answers on the Greece rescue
plan, and they didn’t get that,” said Camilla Sutton, senior
currency strategist at Scotia Capital in Toronto.

She also said that the China’s move to increase reserve
requirements “has dampened risk appetite” and resulted in
safe-haven flows in the U.S. dollar.

In early New York trading, the euro (EUR=: ) fell 0.8 percent
to $1.3591, after dropping to $1.3533, its weakest since May
2009, according to Reuters data.

The euro’s losses pushed the dollar to 80.748 against a
currency basket, its highest since July 2009. The ICE Futures’
dollar index (Read more about the global trade. ) (.DXY: ) was last at 80.478, up 0.6 percent on the

Concern over how Athens would service its debt had hammered
the euro — it has fallen nearly 10 percent since late 2009 —
and analysts said China’s surprise announcement only aggravated
selling in higher risk currencies.

The next steps in the Greece crisis are meetings early next
week of EU finance ministers, although analysts said that might
still be too early to expect much clarity on what the bloc will
do to help Athens tackle its debt. [ID:nLDE61A0W2]

“It’s very difficult to see a silver lining for the euro at
the moment as it’s very difficult to see a solution for
Greece,” said Jane Foley, currency research director at in London.

“And certainly, with China slowing, too, it just enhances
the safe-haven behavior toward the dollar.”

The single European currency also struck a decade low
against the Australian dollar (EURAUD=R: ) at A$1.5275.

Adding to the pain were figures on Friday showing the euro
zone’s gross domestic product rose only 0.1 percent in the
fourth quarter, suggesting its economic recovery has lost steam
as growth in Germany, the euro zone’s largest economy, stalled
in October, November and December. [ID:nLDE61B11U]

The Australian dollar (AUD=: ) fell 1.0 percent against the
U.S. dollar to US$0.8823.

The U.S. dollar rose 0.8 percent against the yen to 90.35
(JPY=: ), extending gains after stronger-than-expected U.S.
retail sales data. [ID:nN11214682].


(Additional reporting by Naomi Tajitsu in London; Editing by
Padraic Cassidy)
([email protected]; +1 646 223 6322; Reuters
Messaging: [email protected]))

FOREX-Euro slides on persistent Greek woes; US dollar rises