FX round-up: Greek woes weigh on euro, but Credit Suisse bullish on Eurozone
The single currency drifted lower with market commentary referencing the increased risk of a Greek debt default as the main reason for the move.
However, in parallel some analysts were also warning that the recent large drop in the euro could feed on itself as official institutions look to lower the exposure of their foreign exchange reserves to a depreciating single currency.
Euro/dollar finished the session 0.75% lower at 1.0736.
In the afternoon Greece issued a decree forcing local governments to transfer their cash and term deposits to their accounts at the central bank.
According to Stephen Jen, manager of the SLJ Macro hedge fund, the euro´s share of all reserves will drop by two to four percentage points over the coming quarters, equating to a reduction of between $240bn and $480bn, from the most recent estimate for total global FX reserves of $11.6trn.
The flow of data out of the UK was minimal. By the end of trading cable had lost 0.44% to finish at 1.4898.
Dollar/yen rose 0.41% to 119.289 by the end of trading. In the afternoon it was reported that Japan and the US had made advances to clinch a free trade deal.
Speaking in the afternoon the president of the Federal Reserve bank of New York said the timing of interest rate hikes would be data dependent, although he hoped the first increase would arrive in 2015.
Acting as a backdrop, and noth withstanding recent events in Greece, analysts at Credit Suisse sounded a bullish note on growth prospects in the Eurozone.
In a research note e-mailed to clients they worte: "The extraordinary run of stronger-than-expected euro area economic data could reach a zenith in mid-May, with a Q1 GDP report shaping up to print annualised growth of between 2-3%.
"[...] though, there's still information in that recent strength. Consumers spending their windfall on durable goods belies better confidence and the effects of monetary policy easing. And faster production has boosted employment growth. And those are more persistent fundamentals that can underwrite a more vigorous recovery than that seen in the past two years."
Meanwhile, analysts at Strategas could be heard emphasising how US consumer prices had advanced at an annualised 2.3% pace over the last three months.