The euro slipped in Asian trade on Wednesday after a buying spree sparked by Greece’s bailout deal fizzled owing to lingering concerns over Europe’s sovereign debt problems.
The single currency bought $1.2935 and 105.95 yen in Tokyo morning trade, compared with $1.2938 and 106.30 yen in New York late Tuesday. The dollar fetched 81.89 yen against 82.16 yen.
“A weaker euro-dollar rate than prior to the news yesterday of a deal to keep Greece funded and its debt levels contained, partly reflects a classic ‘buy the rumour, sell the news’ response,” National Australia Bank said.
The eurozone and International Monetary Fund agreed Tuesday to trim Greece’s heavy debt load and release the latest batch of rescue fund amounting to 43.7 billion euros in exchange for promised austerity reforms.
“The whole Greek situation was obviously built into currency markets so it’s sold off since,” said Tim Kelleher, ASB’s head of FX institutional sales New Zealand.
“I don’t think the euro is going anywhere fast,” he told Dow Jones Newswires.
Worries about the US “fiscal cliff” of spending cuts and tax hikes, due to come into effect on January 1 unless a divided
US congress strikes a new spending deal, may also weigh on the euro, dealers said.
It “tends to be negative for equities” and that tends to lead to a sell-off of higher-yielding “risky” units, which will drag the euro lower”, Kelleher said.
The euro was also weighed on uncertainty over an independence drive by debt-hit Spain’s Catalonia region, dealers said. A raft of US economic data released Tuesday, however, gave a boost to sentiment about the health of the world’s biggest economy. US consumer confidence rose this month to its highest level since February 2008, while US home prices rose in September, a fresh sign of recovery for the country’s troubled housing market.
