Euro Weakens Against Yen as EU Ministers Debate Greek Aid

Euro Weakens Against Peers Amid Political Uncertainty in Spain
Supporters wave Catalan and European Union flags during a CiU party election meeting with Catalan President Artur Mas in Tarragona, Spain. Photographer: Stefano Buonamici/Bloomberg

The euro fell for the first time in six days against the yen as European Union finance ministers gathered for a third meeting this month to try to reach agreement on aid for Greece.

The yen rose against all of its 16 most-traded counterparts as a decline in global stocks boosted demand for safer assets and after a technical indicator signaled its recent slide was excessive. Canada’s dollar weakened after Bank of Canada Governor Mark Carney was named to lead the Bank of England, spurring speculation over who will replace him in Ottawa. Philippine’s peso rose on wagers for record remittances.

Negative risk sentiment “is a reflection of the underlying uncertainty that remains in the market in terms of unease in Europe, that nothing is a foregone conclusion,” said Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co. “Investors are still clinging to that notion that Greece wins that payday, so that’s keeping a floor under the euro.”

The euro declined 0.4 percent to 106.47 yen at 5 p.m. in New York after rising to 107.14 yen, the strongest level since April 27. The single currency was little changed at $1.2972 after climbing to $1.2991 on Nov. 23, the strongest since Oct. 31. The yen gained 0.4 percent to 82.08 per dollar.

The euro may advance versus the yen to the strongest level in almost eight months even after failing to break a key level of resistance, according to Credit Suisse Group AG, which cited technical indicators.

Loonie Weakens

The shared currency, which found resistance at 107.16 yen and dropped lower, will increase to 107.74 on a longer-term basis, Cilline Bain, a London-based technical analyst at the firm, wrote today in a client note, citing Fibonacci analysis. The euro may then climb to 111.45, which would be the highest level since March, Bain said.

Canada’s dollar fell against most of its major peers and declined from almost a two-week high versus its U.S. counterpart as risk appetite waned. The Canadian currency, known as the loonie, weakened 0.1 percent to 99.35 cents per U.S. dollar.

Carney, Bank of Canada’s top official since 2008, was unexpectedly appointed to succeed Mervyn King at the Bank of England. Carney is also head of the Group of 20’s Financial Stability Board.

“It’s great news for the U.K. -- they need that credibility,” Peter Gorra, chief dealer for BNP Paribas SA, said in an interview on Bloomberg Television’s “Lunch Money” with Sara Eisen. It will hurt Canada’s dollar “long-term, but in the short-term, dollar-Canada should stay around the parity level.”

Reserve Currencies

The currency got a boost last week after the International Monetary Fund’s move to deem the Australian and Canadian dollars reserve assets, bolstering demand even as the commodity boom that drove the currencies to the strongest since at least 2007 loses steam.

Britain’s pound erased losses versus the euro after the announcement, trading little changed at 80.95 pence per euro and $1.6027.

The Philippine peso rose to a four-year high of 41 per dollar, according to Tullett Prebon Plc. on speculation remittances will increase beyond a record reached last month. That is the strongest level since March 11, 2008.

More than nine million Filipinos working abroad sent home $1.84 billion to their families in September, the central bank reported Nov. 15. Remittances, which make up almost 10 percent of the economy, usually rise toward the end of the year to fund spending for the Christmas and New Year holidays, according to Security Bank Corp.

Recessionary Phase

Japan’s currency rallied today as the Stoxx Europe 600 Index of shares slid 0.5 percent and the Standard & Poor’s 500 Index dropped 0.2 percent.

The 14-day relative strength index for the yen against the dollar was at 30 today after dropping to 25 at the end of last week, with 30 considered a sign an asset’s decline has been too rapid. Japan’s currency had slumped 3.5 percent versus the dollar during the previous two weeks.

Minutes of the Bank of Japan’s Oct. 30 meeting released today showed a few members of the policy board said the economy entered a recessionary phase, while one indicated the need for new ways to boost price expectations. The BOJ last month increased asset purchases by 11 trillion yen, announced a new lending program and signed a joint statement with the government on ending deflation.

Greek Debate

Finance chiefs from the single-currency bloc started their meeting at 12:30 p.m. in Brussels, less than a week after an all-night gathering failed to yield agreement and days after a European Union summit broke up without a proposed seven-year budget. At stake is the continuation of a three-year mission to return Greece to financial health.

“It would be irresponsible not to reach an accord given all the efforts that have been made,” French Finance Minister Pierre Moscovici said yesterday on BFM television.

A solution is hung up on politics in Germany, the dominant country in Europe’s crisis management, where Chancellor Angela Merkel is campaigning for a third term next year on the pledge that Greece won’t cost taxpayers an additional cent.

“It seems a final agreement for Greece is very close although this is another measure which kicks the can down the road,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.

Catalan President Artur Mas, who called early elections to force the debate on independence, won 50 of the 135 seats in the regional assembly for his Convergencia i Unio party, down from 62. The separatist Catalan Republican Left, known as the ERC, more than doubled its seats to 21 from 10. Two smaller parties that also back a plebiscite secured 16 seats.

The euro has weakened 2.2 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar dropped 2.4 percent, and the yen slid 9.2 percent.

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