Euro weaker against yen, Swiss franc as weekend Greek talks eyed

[June 26, 2015] By Anirban Nag

LONDON (Reuters) - The euro fell against the safe haven yen and Swiss franc on Friday, as investors cut exposure to the single currency before the weekend amid worries over whether a deal between Greece and its creditors can be struck to avert a debt default.

Some traders expect further risk reduction on Friday, a factor that is likely to underpin both the franc and the yen.

Greece failed again on Thursday to clinch a deal with its international creditors, setting up a last-ditch effort on Saturday to avert a default next week.

The euro was down 0.2 percent against the yen at 138.15 yen, while it shed 0.2 percent against the Swiss franc to trade at 1.0468 francs. Both the yen and the franc tend to gain during times of financial market stress.

"With very little clarity about Greece, who wants to go into the weekend holding positions, only to be stopped out by volatility early on Monday?" Jeremy Stretch, head of currency strategy at CIBC World Markets, said.
 

"We may see a bit of a relief rally in the euro if there is a compromise at the weekend, but I would prefer to sell into those rallies, as there is still the case of monetary policy divergence between the euro zone and the United States."

The euro was marginally lower against the dollar at $1.12, drifting in a razor thin $1.1179-$1.1208 range, even narrower than its $1.1153-$1.1228 range on Thursday. It was down about 1.4 percent for the week.

"The euro itself is still struggling. The downward pressure is intact," said Kaneo Ogino, director at Global-info Co in Tokyo, a foreign-exchange research firm. "Rangebound trading will continue, until the next news trigger on Greece," he said.

A Greek euro exit would create considerable market turbulence, the head of the Swiss National Bank warned, adding the bank would fight a rush to buy already overvalued Swiss francs.

The dollar was weaker against the yen at 123.37, and off this week's high of 124.38 yen.

Data released early on Friday showed Japan's household spending in May rose for the first time in more than a year.

Other data showed a robust jobs market fueled hopes that companies will begin lifting wages needed to spark inflation toward the Bank of Japan's ambitious 2 percent goal, though core consumer prices rose just 0.1 percent in the year to May.

(Additional reporting by Lisa Twaronite; Editing by Alison Williams)

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