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FOREX-Euro flat vs dollar, near 2-month low on Greece concerns
November 12, 2012 / 9:41 PM / 5 years ago

FOREX-Euro flat vs dollar, near 2-month low on Greece concerns

* Euro zone govts disagree on whether to give Greece money
    * China trade data shows economy recovering
    * U.S. fiscal worries hit appetite for riskier assets

    By Julie Haviv and Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 12 (Reuters) - The euro was unchanged against
the dollar on Monday and nearing a recent two-month low in thin
holiday trading, weighed down by uncertainty as to whether or
not Greece will receive a new round of bailout money to help pay
off its debt.
    The euro has dropped about 1.9 percent against the dollar so
far in November and is seen having limited scope for gains even
if Greece does receive aid. A bleak economic backdrop in the
euro zone contrasts starkly with an improving U.S. economy and
is viewed as a further headwind for the euro.
    Also favoring the safe-haven dollar against the euro is the
a looming U.S. "fiscal cliff," a combination of big spending
cuts and tax increases if Congress does not act to curb the
budget deficit that some believe has the potential to send the
economy into another recession.
    Trade in the United States was on the light side, with the
government bond market closed in observance of the Veterans Day
    Greece stood at the forefront of investor concerns as euro
zone governments disagreed on whether to disburse more money to
the debt-ravaged country on Monday. Worries persisted even
though the Greek government approved a tough 2013 budget,
because of the lack so far of a consensus on how to make
Greece's debts sustainable into the next decade. 
    "Greece continues to be a thorn in the side of the European
Union," said Neal Gilbert, currency strategist at GFT in Grand
Rapids, Michigan. "Despite the Greek parliament passing an
austerity-filled budget this weekend, investors are still
concerned that Greece will not receive its next tranche of funds
in time to avoid defaulting on its loans." 
    Athens has to redeem 5 billion euros ($6.36 billion) worth
of Treasury bills on Nov. 16 and had been counting on cash from
the next tranche of aid to help cover that.
    Greece will get two more years to reach previously agreed
budget goals, but the extra time will cost the euro zone an
additional 32.6 billion euros, draft documents prepared for a
meeting of euro zone finance ministers showed. 
    The euro last traded flat at $1.2710, not far from a
two-month low of $1.2688 touched on Friday, according to Reuters
data. Traders cited stop-loss sell orders below $1.2685.
    Intraday bias on the euro remained negative for now, and a
correction from a high of $1.3169 hit in mid-September could
extend to the $1.24 level, analysts said.
    Concerns about Greece trumped trade data in China suggesting
it is recovering from slower growth, assuaging concerns about
the world's second-largest economy.
    Looking ahead, data due later this week is forecast to show
a slowdown in German growth in coming quarters and France
slipping into recession. 

    Concerns about the U.S. fiscal cliff has driven safe-haven
flows into the dollar and kept it near a two-month high against
a basket of currencies. It was last little changed at
    Demand for higher-risk currencies has been sluggish as
investors fret about the possible impact of some $600 billion in
expiring U.S. tax cuts and spending reductions due to begin to
take effect in January without a deal on Capitol Hill.
    Markets on Monday also shrugged off a 0.9 percent
July-September quarter-on-quarter contraction in Japan's
economic output, which was in line with forecasts. It was the
first negative reading in three quarters, and it added to fears
that slowing global growth is pushing the Japanese economy into
    Morgan Stanley held to its medium-term view that the yen
would weaken and said it expected dollar/yen to resume its
    The dollar was flat against the yen at 79.45 yen, but
above Friday's close of 79.06 yen, its weakest since Oct. 18.
The euro was also unchanged against the yen at 100.98.

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