Euro drops on bad news coming out of Greek negotiations
The euro fell Monday after talks between Greece and its international creditors collapsed, bringing the threat of a Greek exit from the eurozone closer than ever.
The euro dropped to US$1.1220 and 138.50 yen in Tokyo afternoon trade from US$1.1260 and 138.92 yen in New York late Friday.
The U.S. dollar firmed to 123.43 yen from 123.37 in U.S. trade ahead of an eagerly awaited press conference Wednesday by Federal Reserve chief Janet Yellen after a two-day policy meeting.
Analysts said the euro’s fall was limited as investors were still taking a wait-and-see approach to the unfolding debt drama.
Negotiations between Greece and its creditors broke down in less than an hour on Sunday, with both sides blaming the other’s refusal to back down on certain issues.
It fanned fears that the cashstarved Greek government was heading irreversibly into the financial abyss with a huge IMF debt payment due at the end of the month.
The feeling is now stronger than ever that Greece could be heading for an exit from the euro after years of crisis.
All sides had agreed that the talks were the last chance for Athens to unlock vital bailout cash in return for tough reforms that Greece’s Prime Minister Alexis Tsipras still doggedly refuses.
Nomura analyst Harui said investors were now waiting for a Thursday meeting of the eurozone’s 19 finance ministers, who control the bailout purse strings.
Evan Lucas, a markets strategist at IG Ltd. in Melbourne, said the fact that the Sunday meeting lasted only 45 minutes “doesn’t give you confidence a deal will be done” in time.
The dollar was mostly stronger against other Asia-Pacific currencies, firming to SG$1.3480 from SG$1.3464 on Friday, to 1,115.81 South Korean won from 1,114.29 won, and to 33.75 Thai baht from 33.71 baht.
The greenback also rose to 64.12 Indian rupees from 64.03 rupees, to 13,334 Indonesian rupiah from 13,323 rupiah.
It edged down to 45.28 from 45.30 Philippine pesos.
The Australian dollar weakened to 77.17 U.S. cents from 77.28 cents while the Chinese yuan bought 19.85 yen against 19.86 yen.