* Euro zone, IMF fail to agree on a deal on Greece
* Greece to roll over T-bills on Tues to avoid default
* Another euro zone meeting planned on Nov 20
* Fall in China shares following report of continued housing
curb also a factor
* Dollar index rises above Ichimoku cloud top
By Hideyuki Sano
TOKYO, Nov 13 The euro dipped to a two-month low
against the dollar on Tuesday after the euro zone and the
International Monetary Fund failed to agree on a long-term plan
to reduce Greece's debt, preventing disbursement of immediate
aid to Athens.
The currency was also bruised by the broader risk averse
mood as Chinese shares tumbled following state media reports
that government housing market curbs will remain in place,
sapping optimism that the world's second-largest economy was
While market players expect Greece to manage to get by this
week without the aid money it was counting on, uncertainty over
its short-term financing and long-term debt reduction plan was
enough to put off investors.
"Few people would think that the euro zone will desert
Greece. Still, the market will be frustrated by lack of a clear
picture. I expect the euro to keep falling gradually," said
Ayako Sera, senior market economist at Sumitomo Mitsui Trust
With the aid funds from international lenders blocked,
Greece plans to sell treasury bills on Tuesday to refinance a 5
billion issue maturing on Friday.
But some market players are not sure if they can take a
successful auction for granted.
"Although the market was indeed not expecting progress this
time, there remain concerns about Greece's funding, putting
pressure on the euro," Masafumi Yamamoto, chief FX strategist at
Barclays in Tokyo, wrote in a note to clients.
The euro fell to as low as $1.2673, having erased about
four-fifths of its gains made after the European Central Bank
unveiled a programme to buy government bonds with aim to buy
Spanish debt on Sept. 6.
It last stood at $1.2684, down 0.2 percent on the
day, having constantly declining since it peaked at $1.3140
mid-October as the euphoria over the ECB's scheme faded.
Against the yen, the common currency fell to one-month low
of 100.42 yen and last stood at 100.61 yen, 0.4
percent below late U.S. levels.
Euro zone finance ministers agreed to grant Athens two more
years to reach its budget goal but the IMF and the euro zone are
at loggerheads over who should shoulder the cost -- around 33
billion euro -- as well as on a longer-term target date to
shrink the country's debt pile.
"If you extend the deadline by two years, you need more
money, and countries like Germany and Finland will need to go to
the parliament. The market will be concerned if all of that goes
so smoothly," said a trader at a Japanese bank.
Eurogroup Chairman Jean-Claude Juncker said on Monday
another Eurogroup meeting would take place on Nov. 20, before
the EU summit from Nov 22, though officials said more
negotiations could be required the week after that to nail down
a new deal.
ANOTHER FISCAL PROBLEM
On top of concerns about the euro zone, fears of a recession
in the United States if policymakers in Washington fail to
repeal the fiscal cliff of automatic spending cuts and higher
tax rates due to kick in early next year undermined risk
sentiment, helping the dollar.
Also prompting unwinding in bets on risk currencies, Chinese
shares fell on Tuesday after the news of housing curbs sparked
fears that a planned change in Chinese new leadership, expected
to be announced on Thursday, may not herald a loosening in
The dollar index, a measure of the dollar against a basket
of six major currencies, rose to 81.20, its highest level
since early September.
On the daily Ichimoku chart, the index rose above the top of
the cloud, which stood at 81.054, in a major bull signal for the
But market players also said the fiscal cliff could haunt
the dollar, if investors start betting the Federal Reserve will
take easing steps to counter the effect of the fiscal cliff.
In such case, the dollar's weakness may become notable
particularly against the yen, which often tends to outperform
when risk appetite wanes because of Japan's net creditor status.
The dollar fetched 79.43 yen, little changed on the
day and off three-week low of 79.07 yen.
The U.S. currency briefly rose to 79.64 yen on speculation
Japanese Prime Minister Yoshihiko Noda may soon dissolve the
parliament and hold a snap election by the end of year.
Opinion polls have shown the conservative opposition Liberal
Democratic Party, whose leader Shinzo Abe is seen as putting
more pressure on the Bank of Japan to ease its policy, is in the