FOREX-Euro hits 2-month low versus dollar on Greece worry
* Euro hits near two-month low versus firmer dollar
* Concerns before Greek austerity vote dent euro
* U.S. election uncertainty helps safe-haven dollar
* Euro well below support at 200-day moving average
By Jessica Mortimer
LONDON, Nov 5 (Reuters) - The euro fell to a near two-month low against a broadly firmer dollar on Monday on uncertainty over a Greek vote on austerity and before this week's U.S. presidential election.
Greece's government will present an unpopular austerity package to parliament on Monday and must win approval in a vote expected on Wednesday to secure more international aid.
The euro fell 0.4 percent to $1.2778, breaking below a reported options barrier at $1.2800 and stop loss sell orders at $1.2780 to mark its lowest since Sept. 11. It was last at $1.2794.
Having broken below the 200-day moving average around $1.2836, chartists said the euro could face further losses, although it has support at the Sept. 11 low of $1.2753.
Euro weakness helped the dollar to a two-month high against a basket of currencies. Uncertainty about the U.S. election, in which incumbent Barack Obama and Republican Mitt Romney are neck and neck in the polls, encouraged safe-haven flows into the U.S. currency.
"With the euro there is concern about what's going on in Greece, that they might not might not get the austerity vote through, and with the dollar the fiscal cliff is really getting some attention before the elections," said Arne Lohmann Rasmussen, head of currency research at Danske Bank in Copenhagen.
He said the dollar was also helped by Friday's better-than-expected U.S. jobs data.
The dollar index hit 80.79, its highest since early September as it surpassed resistance at the 200-day moving average at 80.672.
With the Republicans seen retaining control of the House of Representatives, victory for Obama would be seen as raising the risk of policy paralysis when it comes to dealing with the so-called 'fiscal cliff'.
If Congress cannot agree new arrangements, about $600 billion in government spending cuts and higher taxes will kick in early next year.
If the euro closes below its 200-day moving average it would be the first time this has happened since September. This could signal a departure from its recent $1.28-$1.32 trading range, although it has support at the Oct. 1 low of $1.28035, while traders cited demand from Asian central banks to buy the euro.
Against the yen, the dollar fell on profit-taking, easing 0.2 percent to 80.28 yen, having hit a four-month high of 80.68 yen on Friday after the jobs data.
The dollar faces chart resistance at 80.65 yen, a 50 percent retracement of its decline from March to September, but many analysts expect it to rise in the near term.
"After the dollar/yen has tested a key Fibonacci level, it needs a bit of consolidation in the very near term," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.
"But the dollar looks likely to maintain its uptrend. The dollar charts look bullish and better economic fundamentals in the U.S. compared to Japan's also favour the dollar," he said.
Danske's Rasmussen said he favoured buying the dollar on any dips against the yen, given that the Bank of Japan "has really shown it is ready to be more aggressive and we see Japanese exporters struggling".
Japan's industrial production, a leading indicator of the manufacturing-driven economy, has been falling sharply, prompting the Bank of Japan to ease monetary policy for two months in a row - something it had not done for nearly a decade.
Elsewhere, the Australian dollar was up 0.2 percent at $1.0346, after a pick-up in retail sales left the market still guessing whether or not the Reserve Bank of Australia will cut rates on Tuesday.
- Tweet this
- Share this
- Digg this
- India passes halfway mark in election with BJP gaining strength
- Japan will conduct Pacific whale hunt in wake of court ruling
- Bajaj Auto says union at Chakan plant plans work stoppage
- S.Korea ferry captain rushed back to bridge as ship listed - crewman
- Vice-principal of South Korea school in ferry disaster commits suicide
Nitin Gadkari, former president of the Bharatiya Janata Party and a member of the BJP’s manifesto committee, speaks to Reuters. Here are the edited excerpts. Full Article