* Euro underperforms after Greek referendum call spooks
* Traders on alert for further yen intervention from Japan
* Aussie dollar drops more than 2 pct after rate cut
By Nia Williams
LONDON, Nov 1 The euro fell more than one
percent versus the dollar and yen on Tuesday as investors cut
exposure to the common currency after Greece's unexpected call
for a referendum revived uncertainty over how the euro zone will
solve its debt crisis.
If the Greek people use the referendum to reject the latest
bailout deal it would put the next aid tranche to Greece in
jeopardy, moving it towards the brink of disorderly default,
raising the risk of further contagion and financial market
Those concerns weighed on riskier assets across the board
including commodities and equities, while safe haven German
The dollar index was last trading up 1.5 percent at
77.293, while the euro slid more than 1 percent versus
the dollar to a low of $1.3671, triggering stops below $1.3680.
Traders cited Russian speculators and Swiss names selling
the single currency in early European trade and said key support
came in around $1.3650, the Oct. 18 low. A close below that
level would leave the euro vulnerable to a test of its early
October trough around $1.3145.
The risk-correlated Australian dollar fell more
than 2 percent to a low of US$1.0294 after the central bank cut
interest rates to 4.5 percent, with interest rate futures
suggesting investors were braced for further easing.
The dollar dipped slightly versus the yen, however, having
pulled back from a three-month high as the impact of Japan's
massive intervention on Monday faded a touch. It last traded
down 0.1 percent at 78.12 yen , with market players wary
of further yen selling by the Japanese authorities.
The single currency was also down 1.1 percent versus the yen
at 107.05 , erasing some of the gains made during
"The Greek referendum is a real curve ball, nobody saw it
coming and it injects a lot of uncertainty," said Steven
Saywell, head of FX strategy at BNP Paribas.
"We had a lot of dollar buying yesterday from the Japanese
Ministry of Finance which has added to the dollar bullish view
as well as the setback in equity markets. These are all factors
coming together to add to this risk-off sentiment."
Some analysts said investors would be wary of buying the
dollar too aggressively given a two-day Federal Reserve meeting
that concludes tomorrow and key U.S. jobs data due on Friday.
Any hints that the Fed is considering further monetary easing to
boost the flagging economy could drive the greenback lower.
Trading in dollar/yen steadied after Japan's yen-selling
intervention on Monday. It backed off the three-month high of
79.55 yen hit the previous day but held well above levels seen
before intervention of around 75.65 yen or so.
The dollar briefly surged around 60 pips or so to an
intraday high of 79.10 yen during Asian trading on Tuesday but
quickly gave back its gains, and traders said the rise was
unlikely to have been caused by intervention.
Bank of Japan money market data suggested that around 7.7
trillion yen ($98.7 billion) was sold in Monday's intervention,
well above previous record of 4.5 trillion yen set in August.
After the August intervention the dollar erased all its
gains within a few days and hit a fresh record low just over two
Although investors remained alert for any signs of further
intervention from the Japanese authorities, some analysts said
they saw the dollar gradually easing lower.
"My feeling is that the strategy seems to be to come in once
very aggressively. I imagine from here we will see a gradual
grind lower," said Derek Halpenny, head of currency research at
Bank of Tokyo-Mitsubishi in London.
"It's possibly not going to retrace as quickly as in August.
Intervention has come at a time when the dollar is going to
continue to perform well as risk aversion escalates and Europe
becomes an even bigger mess."
Many market players doubted that Japan would adopt a
Swiss-style floor for dollar/yen given such a move was unlikely
to be endorsed by the G20 or the G10. The G20 is meeting later
this week in Cannes, France.