Euro Trapped in Tightest Range in One Month Amid Greek Stalemate

June 26, 2015 Bloomberg

The euro is stuck in meetings.

The 19-member currency traded in its tightest range in a month versus the dollar as European leaders met in Brussels to try and break the deadlock about financial aid for Greece. While creditor institutions unanimously agreed on a set of proposals for finance ministers to review, Greece didn’t accept the documents, a European Union official said.

“This Greek situation is once again holding everyone hostage,” said Stephen Casey, a New York-based senior foreign exchange trader at Cambridge Global Payments. “Common sense will come through and they’ll come up with some sort of agreement,” which would support the euro in the short term, said Casey, whose company is a foreign-exchange and payments provider.

The shared currency was little changed at $1.1200 at 12:22 p.m. New York time. It fell 0.2 percent to 138.46 yen. The dollar slipped 0.2 percent to 123.65 yen.

“You’re still seeing a euro that is holding up pretty well” because market participants expect an eventual deal to be struck, Christin Tuxen, a senior analyst at Danske Bank A/S in Copenhagen, said by phone. “People are very sidelined, risk-wise.”

Greece Talks

Dueling proposals and a failure to find a compromise have left Greece without a deal to unlock aid, raising concern it may miss a payment of 1.5 billion euros ($1.7 billion) due to the International Monetary Fund on June 30, the same day its bailout ends. Sticking points include pensions, sales tax increases and debt relief.

German Finance Minister Wolfgang Schaeuble told reporters in Brussels he’s not very optimistic for a deal Thursday.

“We have not made much progress,” he said.

The final deadline for an agreement is Sunday, according to Austrian Finance Minister Hans Joerg Schelling.

“The euro is probably going to spend most of its time either side of $1.12 until we get a clear picture of what’s going to happen in Greece,” Stephen Simonis Sr., chief currency analyst in New York at online foreign exchange broker FXDD Global, said by phone. “I don’t think traders can really sink their teeth into trading the euro with this sitting in the back.”

The Bloomberg Dollar Spot Index halted a four-day advance even after reports showed U.S. household spending climbed by the most in almost six years while filings for unemployment benefits held below 300,000 for the 16th week.

Federal Reserve policy makers are closely watching labor-market developments as they try to time their first interest-rate increase since 2006.

The dollar gauge slipped 0.1 percent to 1,177.92 after climbing 1.2 percent during the past four days.

by Lananh Nguyen and Lucy Meakin

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