Euro Declines to Four-Week Low Versus Dollar Amid Greek Pushback

The euro dropped to its lowest level in almost four weeks versus the dollar as Greece told its international creditors they needed to ease conditions for releasing bailout funds to the Mediterranean country.

The common currency fell to a 2 1/2-month low against Britain’s pound as Greek Interior Minister Nikos Voutsis, who has no economic decision-making powers, went so far as to say on Sunday that Greece couldn’t pay the International Monetary Fund in June without a deal. The dollar extended gains on Monday after completing its biggest weekly advance since September 2011. Federal Reserve Chair Janet Yellen said on May 22 that it would be “appropriate” to raise interest rates this year for the first time since 2006.

“There is ongoing euro negativity in the light of the Greek comments about the June 5 payment, while markets consider the dollar in the light of the Yellen warnings on rates on Friday,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “It should be relatively quiet in view of the lack of data and market liquidity.”

Financial markets in the U.S., U.K., Hong Kong and much of Europe are closed Monday for holidays.

The euro fell 0.3 percent to $1.0978 at 5 p.m. Toronto time and reached $1.0959, the lowest since April 28. The common currency fell 0.2 percent to 70.96 pence and touched 70.73 pence, its lowest since March 12. It weakened 0.3 percent to 133.40 yen. The dollar was little changed at 121.49 yen.

Varoufakis’s View

The euro is coming under pressure after German Chancellor Angela Merkel and French President Francois Hollande last week gave Greece until the end of May to reach an agreement on its aid program, including economic-policy changes demanded by creditors. Greek Finance Minister Yanis Varoufakis said on Sunday his government has met the euro area and IMF three-quarters of the way, so it was up to creditors to cover the remainder.

The Mediterranean nation is scheduled to repay about 300 million euros to the IMF on June 5. Before that the government has to pay monthly salaries and pensions. It has no problem meeting those payments that are due at the end of May, Gabriel Sakellaridis, a spokesman for the administration, said on Monday.

Political upheaval in Spain added to the common currency’s slide as the nation’s bonds tumbled. Prime Minister Mariano Rajoy’s People’s Party suffered its worst result in a municipal election in 24 years as anti-austerity party Podemos and Ciudadanos, which proposes market-based solutions to Spain’s problems, made gains.

Euro Versus Peers

The euro has declined 2.5 percent in the past three months against a basket of peers tracked by Bloomberg Correlation Weighted Indexes, the worst performance of the group.

U.S. data last week signaled the economy is starting to recover from a tepid first quarter as core consumer prices rose at a faster pace than economists expected. The speed of normalization in interest rates is likely to be gradual once increases start, Yellen said May 22 during a speech in Providence, Rhode Island.

In the U.S. this week, investors will be scanning U.S. durable goods, housing and consumer confidence reports.

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major trading partners, rose 0.1 percent, after jumping 2.6 percent last week.

“Investors look exceedingly keen to jump back on the strong dollar story upon any evidence the Fed remains on track for a September liftoff in rates,” Raiko Shareef, a markets strategist in Wellington at Bank of New Zealand Ltd., wrote in an e-mail to clients. “As rather unrepentant dollar bulls, we are comforted by the Fed chair’s messages.”

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