Euro Retreats as Ecofin Summit Looms

By: Barbara Zigah

After the strongest 1-week rally for the Euro in more than three months, the common currency eased back from a 6-week peak against the U.S. Dollar in the Asian trading session. Investors will return their attention back to the Eurozone, specifically Greece, for their official response to the suggestion by the IMF that they should relinquish budget policy control. Knee jerk reaction from Greece’s policymakers was peevish, to say the least, with the Finance Minister insisting that the country was “perfectly capable.”

As reported at 11:19 a.m. (JST) in Tokyo, the Euro slipped to $1.3178, a loss of 0.3% following a week which saw gains for the common currency of nearly 3%. Analysts expect any support to wane, as the underlying factors remain in place to bear more pressure. One currency analyst in Tokyo points out that last week’s rise was more a factor of a softening dollar and an absence of negative news from Europe.

Later today the European finance ministers will be meeting and the topic of discussion will be the Eurozone’s recovery, much as it has been in the past year. A swap out of Greek debt is expected to be finalized soon, with private bondholders taking a haircut o just over 70%, but it doubtless will not be completed prior to the start of the Ecofin summit.