image by phonakins
FOREX-Euro slumps before crucial Greek vote – Reuters news and update details. I hope you will find useful information for making trading decision today.
* Central banks' liquidity pledge reassures investors * Soft U.S. data keeps speculation of Fed easing alive * Yen broadly gains after BOJ stays on hold By Julie Haviv NEW YORK, June 15 (Reuters) - The euro fell for the first time in four days against the dollar on Friday as investors turned cautious ahead of Sunday's crucial election in Greece despite global central banks' willingness to step in to counter any adverse fallout from the vote. G20 officials told Reuters that central banks from major economies stand ready to take steps to stabilize financial markets by providing liquidity and preventing a credit squeeze if the Greek election result roils markets. A coordinated action is likely to support risk appetite and provide relief to the euro although any bounce could prove temporary given Spain's elevated borrowing costs and the risk of contagion to Italy, the euro zone's third largest economy. "People came to realize that global central bank intervention will only emerge if something bad happens," said Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut. "But, if the pro-bailout party wins in Greece on Sunday that would be good news and so the euro is being sold after yesterday's bounce from the intervention news." Volume was thin, however, and investors will likely actively place bets on Sunday night or Monday morning, he said. The euro last traded down 0.1 percent at $ 1.2620, below a three-week high hit of $ 1.2672 on Monday, struck after a 100 billion euro aid package for Spanish banks was agreed at the weekend. Traders cited offers to sell above $ 1.2660 up to $ 1.2670 while option expiries were cited at $ 1.2600. Traders said the euro had scope to post short-term gains if Greece's pro-bailout parties manage to win a majority in Sunday's election. In a scenario where the far-left anti-bailout parties win, the euro could drop towards near two-year lows of $ 1.2286 struck earlier this month. "Investors will be reluctant to hold any meaningful positions either way going into the weekend," said Ankita Dudani, G10 currency strategist at RBS. "The euro has come back from highs around $ 1.2650 and the only reason it will hold above $ 1.2500 is because of the extreme bearish positions and hopes of coordinated central bank action." The euro has gained against the dollar this week as investors sliced hefty positions against the currency. Data last week showed speculator euro net shorts at a record high. Uncertainty about the euro was reflected in the options market, where both one-week and one-month implied volatilities traded at elevated levels of 16.50 percent and 12.65 respectively, up from around 9.8 percent and 11.55 percent at the end of last week. Spanish and Italian bond yields eased on Friday, but still remained near levels considered unsustainable to borrow from capital markets. The deteriorating situation in the euro zone has galvanised policymakers to consider taking action ahead of a G20 summit next week. European Central Bank President Mario Draghi said on Friday the bank was ready to support euro zone banks, should it be required, while Bank of Japan Governor Masaaki Shirakawa said central banks can offer liquidity to calm markets in case the Greek elections heighten tension. The dollar came under pressure as data reflected weakness in the U.S. economy, raising the prospect the U.S. Federal Reserve may resort to further monetary easing. U.S. manufacturing output contracted in May for the second time in three months and a gauge of factory activity in New York state plunged this month, worrisome signs the American economy is cooling. Separate data showed U.S. consumer sentiment falling to a six-month low in early June. The dollar and euro also came under pressure against the yen after the Bank of Japan announced no change in its monetary policy. Analysts said some investors may have positioned for a more dovish stance and were buying back the yen as a result. The euro dropped 0.9 percent on the day to 99.36 yen while the dollar fell 0.8 percent to 78.74 yen, according to Reuters data.