Euro at Risk on Critical Test in ongoing Greek Debt Crisis

DailyFX.com –

  • Greek debt difficulties threaten to force important Euro volatility
  • Key debt auction on April 8, 2015 a key event on the calendar
  • Failure to roll over existing debt raises the threat of Greek default

We’ve recently written on why Greece remains a major threat to financial market stability and the Euro currency itself. And indeed those tensions may be coming to a head as traders send EUR/USD volatility prices significantly higher ahead of the upcoming Greek debt auction. The central point is clear: if Greece fails to refinance expiring Treasury Bills at an acceptable rate, the risks of a larger Greek government default grows significantly.

Key Dates Continue to Warn of Substantial Volatility

April 8 Greek Government to auction €875 million in 178-Day Treasury Bills

April 9 – Greece is to pay €460m to the IMF under terms of first bailout agreement.

April 14 €1,400m of short-term Greek Treasury Bills mature, forcing Greece to roll over into new debt.

April 15Greek Government to auction yet-undetermined amount in 3-month Treasury Bills

A look at FX volatility prices show that traders predict volatility will be especially high through tomorrow’s close, while 1-week and 2-week volatility prices are significantly above even one-year options.

Euro 1-Day Volatility Prices Are Substantially Above 1-Year Prices – Underline Urgency

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Euro at Risk on Critical Test in ongoing Greek Debt Crisis

Data source: Bloomberg. Chart source: R, ggvis

As we wrote last week, some of the most sophisticated traders in the world believe that the coming two weeks will bring substantially more uncertainty than the coming year. This is somewhat illogical—there’s far more you can’t know about 365 days in price action than you can expect in 24 hours. Yet it underlines the urgency of upcoming risks.

What’s at Stake?

If the Greek government fails to hold a successful auction for a relatively modest €875 million in 178-Day Treasury Bills it will signal that investors have all but lost confidence in its solvency.

As it stands most of the Greek government’s short-term debt is held by domestic banks. In normal circumstances those same banks might step in and buy more Greek debt. Yet the domestic financial sector is heavily dependent on substantial Emergency Liquidity Assistance (ELA) from the European Central Bank for its own liquidity. European officials have already told Greek banks that they are not to increase their holdings of short-term government debt.

Demand for tomorrow’s auction will have to come from private investors—domestic or abroad—to cover any gaps for the embattled Greek Treasury. The secondary market for the maturing debt shows that private investors are demanding a usurious 35 percent effective annual yield for debt maturing next week. This is a dangerous signal that private demand will not cover the shortfalls of what Greek banks cannot buy themselves.

Yield to Maturity on Greek Treasury Bills due April 14 Surges to Usurious 35 Percent

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Euro at Risk on Critical Test in ongoing Greek Debt Crisis

Data source: Bloomberg Generic Pricing (BGN). Chart Source: R

The apparent lack of private demand for its Treasury Bills leaves the Greek Government at risk, and ultimately its best hope may rest on purchases from other sovereign governments. And indeed Greek Government officials have made very public overtures to curry favor with Chinese and Russian governments as of late. Whether or not this results in actual bond buying remains to be seen.

Euro Reactions are Far from Predictable

We’re entering a critical stretch for the ongoing Greek sovereign debt crisis, and the next 24 hours may determine near-term direction in the Euro and domestic financial markets.

If the upcoming Greek debt auction fails to elicit sufficient interest, we could see substantial Euro volatility and broader financial market turmoil. Heightened sovereign risks could discourage market makers from making prices in EUR pairs, and in effect this means that the Euro could both rally and fall sharply on any news headlines.

Any surprises could force substantial market moves, and traders should limit trading leverage—particularly in EUR pairs—ahead of the key dates.

— Written by David Rodriguez, Quantitative Strategist for DailyFX.com

Contact and follow David via Twitter: https://twitter.com/DRodriguezFX

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Euro Rises Fourth Day as Greek Officials Promise IMF Payment

The euro advanced for a fourth day after Greece pledged to make a payment to the International Monetary Fund this week.

The shared currency climbed versus most of its major counterparts after Greece’s Finance Minister Yanis Varoufakis reiterated that the country will make the payment of about 450 million euros ($ 494 million) due April 9. The dollar slumped as Federal Reserve Bank of New York President William C. Dudley said the pace of interest-rate increases is likely to be “shallow” once the central bank starts tightening.

“We’ve had Greek headlines for three months now and I think it’s contributed to intraday volatility,” Vassili Serebriakov, a New York-based foreign-exchange strategist at BNP Paribas SA, said in a phone interview. “The most interesting question for me this session is whether the euro can hold above $ 1.10. This is a level where we’ve failed repeatedly and, in our view, it suggests an underlying demand from European investors to sell the euro.”

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The euro advanced 0.5 percent to $ 1.1025 at 9:20 a.m. in New York, extending its longest streak of gains in 11 months.

The common currency rose 0.5 percent to 131.156 yen. The yen was little changed at 118.96 per dollar, while the Bloomberg Dollar Spot Index dropped 0.3 percent to 1,179.24.

Global Talks

Greece and euro-area authorities are in negotiations about a package of measures proposed by the government to repair its economy, a condition for the release of bailout funds.

Varoufakis met IMF Managing Director Christine Lagarde in Washington and is scheduled to meet U.S. officials on Monday. “The country will pay the IMF on April 9,” Greece’s Alternate Finance Minister Dimitris Mardas said in an interview on Mega TV on April 4.

“The market’s pretty much siding with the view that Greece will make that payment,” said Prashant Newnaha, a rates strategist at TD Securities Inc. in Singapore. “If they do make that payment, that’s also going to be a positive for the euro.”

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The euro has tumbled 5.5 percent this year, the worse performer among a basket of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has gained 4.9 percent and the yen advanced 5.7 percent in the period, the indexes show.

Net bearish positions on the euro rose to 226,560 contracts in the week to March 31, the most since the currency’s inception, according to data from the Washington-based Commodity Futures Trading Commission.

More from Bloomberg.com: Dudley: Rate Increases Will Be Data Dependent

The common currency has slumped amid unprecedented easing from the European Central Bank as the U.S. moves toward raising borrowing costs for the first time since 2006.

The timing of interest-rate increases is still uncertain and will depend on data, New York Fed President Dudley said in a speech Monday in Newark, New Jersey. Jobs data trailed forecasts on April 3, casting doubt on the strength of the U.S. recovery.

“It will be important to monitor developments to determine whether the softness in the March labor market report evident on Friday foreshadows a more substantial slowing in the labor market than I currently anticipate,” he said.

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GLOBAL MARKETS-Wall St retreats, Euro heads for record quarterly drop

* Euro heads for biggest quarterly fall since introduction

* Greek debt negotiations weigh on euro, dollar gains

* U.S. stocks off despite strong consumer confidence, M&A

* Crude sags as Iran’s nuclear talks deadline looms

By Sinead Carew

NEW YORK, March 31 (Reuters) – U.S. stocks retreated on Tuesday from the previous session’s rally, though major indexes were headed for a positive first quarter, while the euro was on track for its biggest quarterly fall as worries about Greece kept the currency under pressure.

The European Central Bank’s one-trillion-euro economic stimulus program, launched this month, has weakened the euro and prompted investors to pile into euro zone shares on bets currency weakness, low borrowing costs and cheap oil will boost European companies’ profits.

The euro was last down 0.7 percent against the dollar Its dive has been the dollar’s gain, with the greenback recording its biggest quarterly rise against the world’s top six currencies since 2008.

Meanwhile U.S. stocks have been choppy as investors await the Federal Reserve’s first interest rate hike in almost a decade.

Wall Street saw some support on Tuesday after U.S. consumer confidence unexpectedly rebounded in March. It was also helped by two days of corporate acquisition announcements including several biotech deals on Monday and Charter Communications’ plan to buy Bright House Networks for roughly $ 10 billion.

But this was not enough to turn the market higher.

“Today’s move is largely in reaction to yesterday, a back-to-normal session, but our view on the market is still constructive. As we see continued acquisition deals, that will be supportive for the backdrop,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia.

The Dow Jones industrial average fell 63.59 points, or 0.35 percent, to 17,912.72, the S&P 500 lost 5.22 points, or 0.25 percent, to 2,081.02 and the Nasdaq Composite dropped 13.28 points, or 0.27 percent, to 4,934.16.

There was a 0.5 percent dip on the pan-European FTSEurofirst 300 index as traders squared up for the quarter end.

New euro zone data showed a small pickup in inflation following the launch of the ECB’s stimulus, and with the program set to run for a year and a half, investors remain upbeat on the region.

Greece’s debt negotiations have made investors uneasy on both sides of the Atlantic. Germany’s Chancellor Angela Merkel said on Monday Athens had a certain degree of flexibility on which reforms to implement but stressed that they must “add up”.

Greece’s leader Alexis Tsipras responded by appealing for an “honest compromise” but warned he would not agree to unconditional demands.

Japan’s Nikkei finished the first quarter with a chunky 10 percent gain and the often volatile Shanghai Composite Index hit another seven-year high and gained 16 percent for the quarter on bets of more stimulus from Beijing.

Oil took a slide on prospects that OPEC member Iran could reach a deal with six world powers on its nuclear program that could allow Tehran to sell more of its oil onto an already saturated market.

U.S. crude was last down 1.4 percent at $ 48.00 per barrel while Brent fell 2 percent to $ 55.18.

(Additional reporting by Marc Jones in London, Shinichi Saoshiro in Tokyo and Ryan Vlastelica in New York; Editing by Catherine Evans, Susan Fenton and James Dalgleish)

European manufacturers getting more positive amid lower euro

LONDON (AP) — Enjoying the bonus offered by the much lower euro, manufacturers across much of the 19-country eurozone are hiring again. Greece’s manufacturers though don’t appear to be enjoying the fruits offered by a lower currency amid worries over the country’s economic future.

In a closely monitored survey, financial information company Markit said Wednesday the region’s manufacturers raised employment levels in March at the fastest rate for over three-and-a-half years.

The reason appears clear enough — the sharp fall in the value of the euro currency over the past few months has made exports emanating from the region much more competitive. That’s evident in Markit’s survey, which found incoming new business at its highest level since last April.

As a result, Markit’s purchasing managers’ index — a broad gauge of business activity — for the eurozone’s manufacturing sector rose to 52.2 in March from 51.0 the previous month. Anything above 50 indicates expansion.

The so-called PMI now stands at a 10-month high, the latest in a string of indicators to point to a step-change in the eurozone’s economic recovery.

Markit found growth accelerated across the eurozone, not just Germany, where car makers such as Daimler are already benefiting. Spain and Italy, two countries at the forefront of the region’s debt crisis over the past few years, were highlighted.

“Producers are benefiting from the weaker euro, which has had the dual effect of boosting competitiveness in export markets as well as making competing imports more expensive in the home markets,” said Chris Williamson, Markit’s chief economist.

“The fact that manufacturers are boosting their payroll numbers at the fastest rate for three-and-a-half years indicates optimism that the upturn will be sustained in coming months,” he added.

In recent months, the euro has notched up one milestone after another as it dropped against major currencies. Last month, it hit a 12-year low against the dollar around the $ 1.05 mark. It’s now trading a little higher than that at $ 1.0750.

The fall in Europe’s single currency has been dramatic — as recently as May, it was trading just shy of $ 1.40 and many firms across Europe openly fretted about the impact on their exports.

One country seemingly not benefiting from the falling euro has been Greece, whose economy has been hobbled by the ongoing uncertainty surrounding the country’s bailout.

Discussions between the new Greek government and the country’s creditors over an economic reform plan have dragged. An agreement between the two is needed if Greece is going to get its hands on the next batch of bailout cash — more than 7 billion euros — that it needs to avoid going bankrupt and potentially exiting the euro. And even if an agreement is reached, Greece will still most likely need financial assistance beyond the summer.

That uncertainty has unsurprisingly prompted a cautious approach among those looking to do business with Greek firms. Markit found the Greek manufacturing sector contracting for the third month running in March mainly linked to a further reduction in incoming new work in the sector, in particular from abroad.

“One major concern is the trend in exports, which up until fairly recently had been acting as a support to the sector but are now an area of weakness as uncertainty deters foreign clients,” said Phil Smith, an economist at Markit.

As a result, he said manufacturers are scaling back production, meaning the sector is dragging down the wider economic recovery, which took root last year after a brutal six-year recession saw Greek economic output shrink by a quarter and unemployment and poverty levels swell alarmingly.

Many economists expect Greece to be officially back in recession when first quarter numbers are published next month.

Euro down on Greece uncertainty, rate outlook drives dollar up

imageLONDON: The euro fell on Monday, hurt by uncertainty over whether Greece and its creditors will be able to strike a deal that will help Athens secure funding before it runs out of money by April 20.

Talks continued through the weekend and Athens sounded upbeat, but its lenders said compiling a list of reforms could take several more days. Fitch cut Greece’s credit rating to ‘CCC’ from ‘B’ on Friday.

The dollar rose after Federal Reserve chair Janet Yellen underscored the view that the Fed is likely to start raising interest rates gradually later this year.

The dollar rose 0.5 percent to 119.78 yen, while the euro fell 0.6 percent to $ 1.0830 as it pulls away from a 12-year trough of $ 1.0457.

“Even though euro short positions are at record highs, given the Greek uncertainty and the bias for more monetary injection by the European Central Bank, the path for least resistance is a lower euro/dollar,” said Jeremy Stretch, head of currency strategy at CIBC World Markets.

“Unless the euro drops below $ 1.0770 we could see ranged trading, but with the Fed still looking to raise rates, we could see conditions later this week that are more helpful for overall dollar strength.”

The euro got little help from data that showed consumer prices in Germany picking up. Prices are set to rise in March after falling in the first two months of this year, but inflation is still likely to remain low.

“It is a lot more complicated than just looking at Germany. Yes, we need to see higher inflation in Germany, which would help a price adjustment, but at best better German data is just going to halt the euro decline rather than reverse it,” said Simon Smith, chief economist at FxPro.

For the dollar, U.S. jobs data on Friday will be the key event this week. A robust report could see investors position for tighter monetary policy sooner rather than later.

In a speech on Friday, Yellen outlined the case for a ‘gradualist approach’ to rate hikes, mirroring comments after the FOMC meeting on March 18. She signalled the Fed is likely to start raising rates later this year but said policy tightening could “speed up, slow down, pause, or even reverse course” depending on developments in the economy.

“The jobs numbers are going to be important, but I don’t think they will be the deciding factor determining when the Fed does eventually put rates up,” Smith said.

Copyright Reuters, 2015

Euro Declines On Greece Jitters

The euro came under pressure on Tuesday, as Greece struggled to reach a compromise with its international creditors over economic reforms attached with the bailout deal.

Experts from the International Monetary Fund and the European Union are studying the reform proposals which Athens has proposed to unlock bailout money. While eurozone officials complained that Greece’s plans lack necessary details, Greek Prime Minister Alexis Tsipras argued that he would not submit to creditors unconditionally. Greece will run out of money by April 20 unless it receive bailout funds by then.

Eurozone inflation and jobless rate are due shortly. While the inflation is expected to fall for the fourth month in March, the pace of decline is expected to slow from last month.

In economic news, Germany’s retail sales growth eased at a slower-than-expected pace in February, preliminary figures from Destatis showed.

Retails sales grew 3.6 percent year-over-year in February, slower than January’s 5.0 percent climb, which was revised from a 5.3 percent increase.

The euro was lower against its major opponents, except the franc, on Monday. The EUR/USD pair fell by 0.5 percent yesterday, hurt by continued standoff between Greece and its creditors.

The single currency declined to 1.0744 against the U.S. dollar, its lowest since March 20. Continuation of the euro’s downtrend may lead it to support around the 1.05 zone. The pair ended yesterday’s trading at 1.0831.

The euro declined by 0.5 percent to hit a 4-day low of 0.7277 against the Sterling. If the euro extends slide, it may find support around the 0.72 mark. At Monday’s close, the pair was valued at 0.7312.

Reversing from an early 4-day high of 130.25 against the yen, the euro slipped to a 4-day low of 129.17. The next possible downside target for the euro-yen pair may be located around the 128.00 area. The euro-yen pair was worth 130.03 when it ended Monday’s trading.

Japanese housing starts declined at a slower than expected pace in February, data from the Ministry of Land, Infrastructure, Transport and Tourism showed.

Housing starts dropped 3.1 percent in February from last year, slower than January’s 13 percent decline and an expected decrease of 7 percent.

The 19-nation currency pulled back from an early high of 1.0484 against the Swiss franc, and was steady in subsequent trading. The pair was trading at 1.0460, compared to yesterday’s New York session close of 1.0476.

The euro declined to 4-day lows of 1.3675 against the loonie and 1.4375 against the kiwi, off early high of 1.3748 and a 5-day high of 1.4458, respectively. The euro is poised to challenge support around 1.36 against the loonie and 1.40 against the kiwi.

The euro moved away from an early session’s high of 1.4180 against the aussie, edging down to 1.4113. Next key downside target for the euro may be found around the 1.41 mark.

Looking ahead, Canada GDP for January, U.S. S&P Case Shiller home price index for January, Chicago PMI for March and U.S. consumer confidence index for March are set to be published in the New York session.

At 7:55 am ET, U.S. Federal Reserve Bank of Richmond President Jeffrey Lacker is expected to speak on Economic outlook in Richmond.

Danièle Nouy, Chair of the ECB Supervisory Board, will deliver a speech before the European Parliament’s Committee on Economic and Monetary Affairs on Brussels at 9:00 am ET. At the same time, U.S. Federal Reserve Bank of Cleveland President Loretta Mester moderates a policy session at a conference in Stone Mountain, Georgia.

At 3:00 pm ET, U.S. Federal Reserve Bank of Kansas City President Esther George is expected to speak on the U.S. economy in New York.

by RTT Staff Writer

For comments and feedback: [email protected]

Business News

Euro zone unemployment rate falls 11.3% in February from 11.4%

Investing.com –

Investing.com – The euro zone’s unemployment rate fell to the lowest level since June 2012 in February, boosting optimism over the health of the region’s economy, official data showed on Tuesday.

In a report, Eurostat said that the euro zone’s unemployment rate fell to a seasonally adjusted 11.3% last month from 11.4% in January, whose figure was upwardly revised from a previously reported reading of 11.3%. Analysts had expected the jobless rate to fall to 11.2% in February.

The data showed that among the member states, the lowest unemployment rates were recorded in Germany (4.8%) and Austria (5.3%), and the highest in Greece (26.0% in December 2014) and Spain (23.2%).

EUR/USD was trading at 1.0721 from around 1.0723 ahead of the release of the data, while EUR/GBP was at 0.7265 from 0.7263 earlier.

Meanwhile, European stock markets remained mixed in subdued trade. The EURO STOXX 50 inched up 0.1%, Germany’s DAX tacked on 0.1%, France’s CAC 40 added 0.1%, while London’s FTSE 100 dipped 0.25%.

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Euro Extends Decline On Greece Uncertainty, Weak Eurozone Data

The euro continued its slide against the other major currencies in European deals on Tuesday, after Eurozone inflation fell for the fourth month in a row in March, whereas jobless rate worsened more-than-forecast in February. Market participants are also worried about Greece debt talks, as the country will run out of money in three weeks unless it receive bailout finding.

Flash estimate from Eurostat showed that Eurozone inflation remained negative, with an annual decline of 0.1 percent in March. The index matched economists expectation.

The Eurozone unemployment rate worsened more-than-forecast to 11.3 percent in February, data from the statistical office of the European Union showed. Economists were forecasting a reading of 11.2 percent.

The currency has been in a negative territory due to lack of progress in talks between Greece and its creditors, in order to reach an agreement on reforms to release financial aid. Athens risks default on its financial obligations since it would run out of money by April 20.

The euro was lower against its major opponents, except the franc, on Monday. The EUR/USD pair fell by 0.5 percent yesterday, hurt by continued standoff between Greece and its creditors.

The single currency declined to 1.0712 against the U.S. dollar, its lowest since March 20. Continuation of the euro’s downtrend may lead it to support around the 1.05 zone. The pair ended yesterday’s trading at 1.0831.

The euro declined by 0.8 percent to hit an 8-day low of 0.7254 against the Sterling. If the euro extends slide, it may find support around the 0.72 mark. At Monday’s close, the pair was valued at 0.7312.

The pound received support after data showed that U.K. economy grew more than the prior estimate in the fourth quarter.

Gross domestic product grew 0.6 percent sequentially in the fourth quarter, revised up from 0.5 percent published on February 26, data from the Office for National Statistics showed.

Reversing from an early 4-day high of 130.25 against the yen, the euro slipped to an 11-day low of 128.64. The next possible downside target for the euro-yen pair may be located around the 128.00 area. The euro-yen pair was worth 130.03 when it ended Monday’s trading.

Data from the Ministry of Land, Infrastructure, Transport and Tourism showed that Japanese housing starts declined at a slower than expected pace in February.

Housing starts dropped 3.1 percent in February from last year, slower than January’s 13 percent decline and an expected decrease of 7 percent.

The 19-nation currency pulled back from an early high of 1.0484 against the Swiss franc, and edged down to 1.0445 in European trading. The pair was trading at 1.0476 at Monday’s close. Further weakness is likely to take the euro to a support near the 1.00 mark.

The euro declined to 4-day lows of 1.3652 against the loonie and 1.4346 against the kiwi, off early high of 1.3748 and a 5-day high of 1.4458, respectively. The euro is poised to find downside target around 1.36 against the loonie and 1.42 against the kiwi.

The euro moved away from an early session’s high of 1.4180 against the aussie, edging down to 1.4093. Next key support for the euro may be found around the 1.40 mark.

Looking ahead, Canada GDP for January, U.S. S&P Case Shiller home price index for January, Chicago PMI for March and U.S. consumer confidence index for March are set to be published in the New York session.

At 7:55 am ET, U.S. Federal Reserve Bank of Richmond President Jeffrey Lacker is expected to speak on Economic outlook in Richmond.

Danièle Nouy, chair of the ECB Supervisory Board, will deliver a speech before the European Parliament’s Committee on Economic and Monetary Affairs on Brussels at 9:00 am ET. At the same time, U.S. Federal Reserve Bank of Cleveland President Loretta Mester moderates a policy session at a conference in Stone Mountain, Georgia.

At 3:00 pm ET, U.S. Federal Reserve Bank of Kansas City President Esther George is expected to speak on the U.S. economy in New York.

by RTT Staff Writer

For comments and feedback: [email protected]

Business News

Euro, Aussie Dollar May Rise as Yen Falls on Greece Funding Deal

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Talking Points:

  • Euro to Look Past CPI Data, Focus on Greece Debt Negotiations
  • Greek Deal May Boost Aussie and NZ Dollar, Boost Japanese Yen
  • Access Real-Time FX Markets Analysis with DailyFX on Demand

The preliminary set of March Eurozone CPI figures headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to register at 0.3 percent, rising for a second consecutive month. The outcome seems unlikely to offer much by way of lasting Euro volatility however considering the results’ limited impact on the near-term ECB policy outlook.

Rather, the spotlight is likely to remain on Greece. Athens submitted a list of proposed reforms on Friday. The markets now await the verdict on whether the “institutions” representing Greece’s creditors – the EU, the ECB and the IMF – will approve it and unlock the next round of bailout funding. Investors fear that if external funding is not secured, a cash crunch and subsequent default may lead to the country’s exit from the Eurozone.

On balance, both sides of the negotiation are interested in a deal. Prime Minister Alexis Tsipras and company surely realize that a disorderly redenomination will probably compound the country’s economic woes and cost them their jobs. Meanwhile, EU and IMF officials no doubt prefer to avoid a “Grexit” scenario for fear of the precedent it may set. On balance, this means that some kind of accommodation is more likely than not.

An accord that prevents a default and keeps Greece in the currency bloc is likely to prove supportive for the single currency. Follow-through may be somewhat limited however as on-going ECB QE casts a dark cloud over the near-term outlook. It may likewise boost overall risk appetite, sending the sentiment-geared Australian and New Zealand Dollars upward while punishing the safe-haven Japanese Yen. Needless to say, failing to reach a deal stands to produce the opposite response.

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— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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FOREX-Euro down on Greece uncertainty, rate outlook drives dollar up

* Dollar up 0.6 percent against yen and euro

* Euro weighed down by uncertainty over Greece

* Yellen’s message on gradual tightening provides no fresh impetus (Updates prices, quotes)

By Ahmed Aboulenein

LONDON, March 30 (Reuters) – The euro fell on Monday, hurt by uncertainty over whether Greece and its creditors will be able to strike a deal that will help Athens secure funding before it runs out of money by April 20.

Talks continued through the weekend and Athens sounded upbeat, but its lenders said compiling a list of reforms could take several more days. Fitch cut Greece’s credit rating to ‘CCC’ from ‘B’ on Friday.

The dollar rose after Federal Reserve chair Janet Yellen underscored the view that the Fed is likely to start raising interest rates gradually later this year.

The dollar rose 0.5 percent to 119.78 yen, while the euro fell 0.6 percent to $ 1.0830 as it pulls away from a 12-year trough of $ 1.0457.

“Even though euro short positions are at record highs, given the Greek uncertainty and the bias for more monetary injection by the European Central Bank, the path for least resistance is a lower euro/dollar,” said Jeremy Stretch, head of currency strategy at CIBC World Markets.

“Unless the euro drops below $ 1.0770 we could see ranged trading, but with the Fed still looking to raise rates, we could see conditions later this week that are more helpful for overall dollar strength.”

The euro got little help from data that showed consumer prices in Germany picking up. Prices are set to rise in March after falling in the first two months of this year, but inflation is still likely to remain low.

“It is a lot more complicated than just looking at Germany. Yes, we need to see higher inflation in Germany, which would help a price adjustment, but at best better German data is just going to halt the euro decline rather than reverse it,” said Simon Smith, chief economist at FxPro.

For the dollar, U.S. jobs data on Friday will be the key event this week. A robust report could see investors position for tighter monetary policy sooner rather than later.

In a speech on Friday, Yellen outlined the case for a ‘gradualist approach’ to rate hikes, mirroring comments after the FOMC meeting on March 18. She signalled the Fed is likely to start raising rates later this year but said policy tightening could “speed up, slow down, pause, or even reverse course” depending on developments in the economy.

“The jobs numbers are going to be important, but I don’t think they will be the deciding factor determining when the Fed does eventually put rates up,” Smith said.

(Additional reporting by Anirban Nag; Editing by Larry King)