The euro fell for the first time in three days against the dollar on concern the currency region will struggle to contain its sovereign-debt crisis.
The currency slid versus most of its major counterparts after Greece’s Prime Minister George Papandreou said last week in Athens that he will press ahead with additional austerity measures after failing to win backing from opposition parties. New Zealand’s dollar dropped after surging today to its highest level since exchange-rate controls ended in 1985 as the nation’s trade surplus widened to a record in April.
“Until we get resolution, some clarity on what’s going on, the market is not going to have the confidence to take the euro higher,” said David Watt, senior currency strategist at Royal Bank of Canada’s RBC Capital Markets unit in Toronto.
The euro depreciated 0.3 percent to $ 1.4282 at 5:06 p.m. in New York, from $ 1.4319 on May 27. The shared currency traded at 115.60 yen, compared with 115.67. The dollar was at 80.94 yen, compared with 80.80, after touching 80.70 on May 27, the lowest level since May 16. The pound fell 0.2 percent to $ 1.6475.
Markets were closed today in the U.S. for the Memorial Day holiday and in the U.K. for the Spring Bank Holiday.
The euro declined after Greece’s Antonis Samaras, leader of the biggest opposition party, New Democracy, rejected last week Papandreou’s plan for austerity measures, saying his party wouldn’t be blackmailed.
Call for Consensus
European Union officials have called for consensus on the package, which includes an extra 6 billion euros ($ 8.6 billion) of budget cuts and a plan to speed 50 billion euros of state- asset sales.
France’s consumer spending decreased 0.3 percent in April after a 0.7 percent drop in the previous month, according to the median forecast of 16 economists in a Bloomberg News survey. The report from the national statistics agency is due tomorrow.
The euro has fallen 2.1 percent in the past month for the worst performance of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Currency Indexes. The Swiss franc has strengthened 3.6 percent, and the yen has added 2.3 percent.
New Zealand’s dollar slid 0.4 percent to 81.63 U.S. cents after touching 82.19, the highest since the end of exchange-rate controls more than 25 years ago.
Exports outpaced imports by NZ$ 1.11 billion ($ 910 million) in April, compared with a revised NZ$ 578 million surplus in the prior month. The median forecast in a Bloomberg News survey of economists was for a NZ$ 600 million surplus.
Kiwi’s Resilience
“Resilience of the kiwi has been very impressive,” said Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole SA in Hong Kong. “The figures today from New Zealand are obviously helping out as the trade data was far stronger than the market had expected.”
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, was little changed before reports this week forecast to show employers hired fewer workers in May and manufacturing cooled this month.
“The data has, on the whole, disappointed,” said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington, New Zealand. “The market will just continue to push further out expectations for Federal Reserve tightening. The dollar will probably continue to weaken.”
A projected 185,000 gain in payrolls in May will follow a 244,000 April increase, according to the median forecast of 68 economists in a Bloomberg News survey before the June 3 report from the Labor Department.
The Institute for Supply Management’s manufacturing index fell to 57.6 this month, the lowest level since October, according to the median forecast before a report June 1. Readings above 50 signal expansion.
Interest-rate futures show an 11 percent chance the Fed will raise its target rate for overnight lending between banks by December, down from 22 percent odds a month earlier. The central bank has held its benchmark at zero to 0.25 percent since December 2008.
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