Euro Falls Before Greece Debt Talks as Economic Data DisappointsAnchalee Worrachate and Lananh Nguyen
The euro fell against the dollar and a gauge of future price swings jumped before the resumption of talks aimed at funneling funds to keep Greece solvent.
The Danish krone led losses among the world’s major currencies, tumbling as the head of the Danish Economic Council contradicted a Reuters report, saying by phone he never advised the nation’s central bank or the government to impose capital controls to defend the currency’s peg to the euro. The common currency also declined as the region’s manufacturing expanded at a slower pace than analysts forecast.
“The market is just waiting for some clarity,” Matt Weller, an analyst at Gain Capital Holdings Inc. in Grand Rapids, Michigan, said by phone. “They’ll figure out a way, like they have before, and while it won’t necessarily be a long-term solution, it really seems to be the view of the market right now that it won’t be a big negative for the euro.”
The euro slid 0.3 percent to $1.1338 at 10:38 a.m. New York time, extending this week’s decline to 0.5 percent. It dropped 0.6 percent to 133.44 yen.
Weller said the euro “might still hold around this $1.13 level heading into next week.”
Three-month implied volatility for the euro against the dollar rose for the first time in nine days, climbing to 10.70 percent, set for the highest close in more than a week.
“I never advised the central bank to impose capital controls, and I don’t expect they will be used,” Hans Jorgen Whitta-Jacobsen, head of Denmark’s Economic Council, said of the Reuters article.
Karsten Biltoft of the central bank said it won’t comment on the report.
Conjecture that Denmark may impose capital controls is flawed by fact that country is a part of the European single market, which requires members to allow free movement of capital, said Danske Bank senior analyst Jens Naervig Pedersen.
The krone fell 0.4 percent to 6.5747 per dollar and 0.1 percent to 7.4540 versus the euro.
Euro-area finance ministers will hold the emergency talks with Greek officials later than previously scheduled amid increasing pressure to find a compromise on funding as the current bailout program will expire by the end of this month.
Germany sees Greece’s proposal for an extension of financial aid as a good signal for talks, government spokeswoman Christiane Wirtz told reporters in Berlin. The talks promise to be “difficult,” Malta’s Finance Minister Edward Scicluna said in an interview.
The euro fell 0.9 percent to 1.06924 Swiss francs, halting three days of gains.
“That would point to some nervousness about probability of agreement,” said Daragh Maher, a foreign-exchange strategist at HSBC Holdings Plc in London.
The euro declined 4.1 percent versus a basket of nine developed-nation peers this year, according to Bloomberg Correlation-Weighted Indexes. The yen climbed 4.3 percent and the dollar rose 3.1 percent.
Markit Economics’s manufacturing PMI for the euro region rose to 51.1 in February from 51 the previous month. That trailed the 51.5 estimate of analysts in a Bloomberg survey.
“We see the PMI data as disappointing, and perhaps that offered some last-minute opportunity to square books ahead of the Eurogroup summit,” said Roberto Mialich, a senior foreign-exchange strategist at UniCredit SpA in Milan. “That weighed on the euro.”