The yen declined against the euro and other major peers as Greek Prime Minister Lucas Papademos won approval from parliament for austerity measures to secure a second package of aid, damping demand for haven assets.
Japan’s currency also fell after data showed its gross domestic product shrank by more than forecast as exports slumped, fanning speculation officials may act to weaken the yen. The 17-nation euro rose versus 10 of its 16 major counterparts as Greek Parliament Speaker Filippos Petsalnikos said on state-run Vouli TV that a total of 199 lawmakers voted in favor of the austerity plan. Australia’s dollar gained before a report forecast to show U.S. retail sales rose.
“After the Greek vote and the weaker GDP, there was some selling of the yen,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “Crosses against the yen, such as euro-yen, actually went higher.”
The yen declined 0.3 percent to 102.81 per euro as of 1 p.m. in Tokyo from last week in New York. The Japanese currency fell as much as 0.2 percent before trading unchanged at 77.61 per dollar. The euro rose 0.4 percent to $1.3249.
Greece’s Finance Minister Evangelos Venizelos told lawmakers before the vote to secure a 130 billion-euro ($172 billion) second aid package that “we must show that Greeks, when they are called on to choose between the bad and the worst, choose the bad to avoid the worst.”
Wage Reductions
With only weeks remaining before the country faces a 14.5 billion-euro bond payment, George Papandreou and Antonis Samaras, the leaders of the two largest parliamentary parties, urged support for the bill. Lawmakers, with an eye on elections as early as April, bristled at measures such as a 22 percent reduction in the minimum wage, smaller pensions and job cuts.
Seventy-four lawmakers voted against the bill, and rioters protesting the measures set fire to buildings in Athens. Greece was granted its first aid package of 110 billion euros in May 2010.
Passage of the bill puts the spotlight on a meeting of euro-area finance ministers on Feb. 15 that must decide whether to approve the second aid package. Emergency euro-region talks on Greece broke up on Feb. 9, with Luxembourg Prime Minister Jean-Claude Juncker saying the Greek government must turn budget cuts into law.
The Greek vote “takes some of the downside out of euro for the short-term,” said Sacha Tihanyi, Hong Kong-based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia. “It certainly was helpful and positive for the currency. It probably induced some short-covering.” A short position is a bet that an asset will decline in value.
Net Shorts
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro against the dollar compared with those on a gain -- so-called net shorts -- was 140,593 on Feb. 7, according to figures from the Commodity Futures Trading Commission. That compares with net shorts of 157,546 a week earlier.
The euro has gained 0.6 percent over the past week, the third-best performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen dropped 1.9 percent, the worst performer, while the dollar has lost 0.4 percent over the same period.
Japan’s economy shrank an annualized 2.3 percent in the fourth quarter as slumping exports undermined a recovery from last year’s record earthquake. The contraction compared with the median forecast for a 1.3 percent decline in a Bloomberg News survey of economists.
BOJ Meeting
The report underscores pressure on Bank of Japan officials meeting today and tomorrow to consider more monetary easing as gains in the yen worsen losses for companies from Sony Corp. to Panasonic Corp.
“The focus will be on the BOJ to see whether they will have further easing,” Forecast’s Lee said. “Market players will be cautious of being long on dollar-yen.”
Japanese Finance Minister Jun Azumi reiterated at a parliamentary budget committee session in Tokyo that he’ll act on excessive and speculative moves in the currency. Japan spent 14.3 trillion yen ($184 billion) in intervention operations last year to stem gains in the currency as it rose to postwar records against the dollar, hurting the nation’s exporters.
The greenback declined against Australia’s dollar for the first time in four days before Commerce Department figures tomorrow projected to show a 0.8 percent gain in U.S. retail receipts in January, according to the median forecast of economists surveyed by Bloomberg. That would follow a 0.1 percent advance in December.
“Economists have underestimated the upside to the U.S. retail report,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia. “It’s probably likely to weaken the U.S. dollar.”
Japan’s currency also fell after data showed its gross domestic product shrank by more than forecast as exports slumped, fanning speculation officials may act to weaken the yen. The 17-nation euro rose versus 10 of its 16 major counterparts as Greek Parliament Speaker Filippos Petsalnikos said on state-run Vouli TV that a total of 199 lawmakers voted in favor of the austerity plan. Australia’s dollar gained before a report forecast to show U.S. retail sales rose.
“After the Greek vote and the weaker GDP, there was some selling of the yen,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “Crosses against the yen, such as euro-yen, actually went higher.”
The yen declined 0.3 percent to 102.81 per euro as of 1 p.m. in Tokyo from last week in New York. The Japanese currency fell as much as 0.2 percent before trading unchanged at 77.61 per dollar. The euro rose 0.4 percent to $1.3249.
Greece’s Finance Minister Evangelos Venizelos told lawmakers before the vote to secure a 130 billion-euro ($172 billion) second aid package that “we must show that Greeks, when they are called on to choose between the bad and the worst, choose the bad to avoid the worst.”
Wage Reductions
With only weeks remaining before the country faces a 14.5 billion-euro bond payment, George Papandreou and Antonis Samaras, the leaders of the two largest parliamentary parties, urged support for the bill. Lawmakers, with an eye on elections as early as April, bristled at measures such as a 22 percent reduction in the minimum wage, smaller pensions and job cuts.
Seventy-four lawmakers voted against the bill, and rioters protesting the measures set fire to buildings in Athens. Greece was granted its first aid package of 110 billion euros in May 2010.
Passage of the bill puts the spotlight on a meeting of euro-area finance ministers on Feb. 15 that must decide whether to approve the second aid package. Emergency euro-region talks on Greece broke up on Feb. 9, with Luxembourg Prime Minister Jean-Claude Juncker saying the Greek government must turn budget cuts into law.
The Greek vote “takes some of the downside out of euro for the short-term,” said Sacha Tihanyi, Hong Kong-based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia. “It certainly was helpful and positive for the currency. It probably induced some short-covering.” A short position is a bet that an asset will decline in value.
Net Shorts
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro against the dollar compared with those on a gain -- so-called net shorts -- was 140,593 on Feb. 7, according to figures from the Commodity Futures Trading Commission. That compares with net shorts of 157,546 a week earlier.
The euro has gained 0.6 percent over the past week, the third-best performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen dropped 1.9 percent, the worst performer, while the dollar has lost 0.4 percent over the same period.
Japan’s economy shrank an annualized 2.3 percent in the fourth quarter as slumping exports undermined a recovery from last year’s record earthquake. The contraction compared with the median forecast for a 1.3 percent decline in a Bloomberg News survey of economists.
BOJ Meeting
The report underscores pressure on Bank of Japan officials meeting today and tomorrow to consider more monetary easing as gains in the yen worsen losses for companies from Sony Corp. to Panasonic Corp.
“The focus will be on the BOJ to see whether they will have further easing,” Forecast’s Lee said. “Market players will be cautious of being long on dollar-yen.”
Japanese Finance Minister Jun Azumi reiterated at a parliamentary budget committee session in Tokyo that he’ll act on excessive and speculative moves in the currency. Japan spent 14.3 trillion yen ($184 billion) in intervention operations last year to stem gains in the currency as it rose to postwar records against the dollar, hurting the nation’s exporters.
The greenback declined against Australia’s dollar for the first time in four days before Commerce Department figures tomorrow projected to show a 0.8 percent gain in U.S. retail receipts in January, according to the median forecast of economists surveyed by Bloomberg. That would follow a 0.1 percent advance in December.
“Economists have underestimated the upside to the U.S. retail report,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia. “It’s probably likely to weaken the U.S. dollar.”
