Euro Close to 2-Month Low on Greek Aid Needs; Kiwi Strengthens

The euro traded close to a two-month low against the dollar as a draft policy makers’ report said Greece may require an extra $15 billion during the next two years and there are “very large risks.”

Europe’s shared currency traded at almost a one-month low against the yen after the report about the so-called troika as European leaders prepare to meet to seek a plan to maintain Greece’s solvency. The New Zealand dollar rallied after a bigger-than-estimated trade surplus in China improved prospects for exports. South Africa’s rand declined as global stocks and commodities weakened.

“We saw headlines surrounding the troika draft indicating that there will be a financing gap for Greece, which comes as no surprise, but how to fill that gap is still unclear,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “The euro’s price action has been relatively calm, which indicates a degree of comfort by investors that some accommodation will be found.”

The euro was little changed at $1.2710 at 5:01 p.m. New York time after falling to $1.2690 on Nov. 9, the weakest since Sept. 7. It was little changed at 101.03 yen, after sliding 2.1 percent last week. The yen was little changed at 79.50 per dollar.

Bennenbroek said he expects the euro to stay above $1.2650.

Troika Draft

A draft document from the European Central Bank, the European Commission and the International Monetary Fund, known as the troika, was obtained by Bloomberg News. Giving Greece a two-year extension to meet budget targets would ease the impact of austerity measures, the troika said.

“It’s looking like another near-default for Greece and I definitely think they won’t be granted the bailout from the euro-finance ministers today,” said Eimear Daly, a currency market analyst at Monex Europe Ltd. in London.

The euro has fallen 3.4 percent this year, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes after the yen, which has declined 4.8 percent. The dollar has dropped 1.3 percent.

New Zealand’s dollar has strengthened 4.5 percent this year, the best performer, the Bloomberg correlation-weighted indexes show.

China Economy

China’s exports exceeded imports by $32 billion in October, the customs administration said Nov. 10, compared with a $27.3 billion trade surplus estimated by economists surveyed by Bloomberg. China is Australia’s biggest trading partner.

The so-called kiwi rose against all its major counterparts, gaining 0.4 percent to 81.75 U.S. cents and advancing 0.4 percent to 64.99 yen. The so-called Aussie rose 0.4 percent to $1.0428.

China buys 28 percent of Australia’s exports and 14 percent of New Zealand’s, according to data compiled by Bloomberg.

The yuan strengthened 0.26 percent to close at 6.2291 per dollar in Shanghai, the biggest gain since Sept. 28, according to the China Foreign Exchange Trade System.

South Africa’s rand fell 0.4 percent to 8.7435 per dollar. The MSCI World Stock Index was 0.1 percent weaker and the Standard & Poor’s GSCI Index of 24 raw materials fell 0.3 percent.

The euro zone is the second-biggest trading partner for the largest African nation.

Euro Meetings

Finance ministers from the 17-member euro-region will meet at 5 p.m. in Brussels after Greek Prime Minister Antonis Samaras gained enough support from lawmakers in his three-party coalition to pass the 2013 budget. Dutch Finance Minister Jeroen Dijsselbloem said today euro area finance chiefs may have to return to Brussels later this week to finalize a decision on Greek rescue aid.

The ministers intend to prevent a five-billion-euro ($6.35 billion) Greek bill redemption on Nov. 16 from triggering an accidental default, while they’re unlikely to ratify a 31.5 billion-euro payment to Greece that has been frozen since June, a European official said Nov. 9.

“Although the Greek budget vote passed parliament comfortably, the European Union could decide to delay the payment of the 31.5 billion euro tranche to Greece until the end of the month,” Morgan Stanley strategists led by Hans Redeker, the London-based head of foreign-exchange strategy, wrote in a note to clients. “We expect the euro to remain under pressure in the near term,” against the dollar, they wrote.

The 17-nation common currency will fall toward its 100-day moving average at $1.2639, they predicted.

Peso Trades

Mexico’s peso rose as much as 0.3 percent against the dollar, gaining for the first time in four days. The peso has turned from the world’s strongest major currency into the weakest of the past month amid growing investor concern the economy will slow as demand diminishes from the U.S.

The pound fell against most of its major counterparts, declining 0.1 percent versus the euro to 80.05 pence and 0.1 percent to $1.5877.

The Bank of England’s quarterly report is due in two days and may provide room for further asset purchases to boost growth. The central bank refrained from adding more stimulus at its most recent policy meeting, minutes from which are due next week.

The pound may extend declines to a 10-week low against the dollar should it drop through its 200-day moving average between $1.5873 and $1.5851, Credit Suisse Group AG said, citing trading patterns.

Download: Citi’s Rahbari Says Germany May See Brief Recession


Before it's here, it's on the Bloomberg Terminal. LEARN MORE