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The euro tumbled on concern Europe’s most indebted nations including Greece may be forced to reorganize their debt payments to bondholders.
The euro weakened against the dollar, yen, Swiss franc and pound.
The Japanese currency strengthened after German Finance Minister Wolfgang Schaeuble told Die Welt newspaper that Greece may need to negotiate with creditors should an audit in June question its ability to make debt repayments. Portuguese and Greek bonds slumped, driving yields to record highs.
“The comments from Schaeuble are critical and represent a change in view that some form of debt restructuring cannot be ruled out,” said Michael Derks, head of currency strategy at FXPro Financial Services. “There seems to be a greater focus on these peripheral issues and that’s dragging the single currency down.”
The New Zealand dollar strengthened to a five-month high against the greenback after demand rose at a NZ$700 million ($556 million) auction of government bonds.
Australia’s dollar reversed earlier losses as Asian stocks advanced, boosting demand for higher-yielding assets.
Australia’s dollar weakened earlier after leaders of the so-called BRICS nations said rising commodity prices posed a threat to global growth and the Monetary Authority of Singapore stepped up its fight against inflation.
EUR/USD initially rose to the highs on $1.4480, but Schaeuble's comments dragged the rate down to session lows around $1.4362. Later rate recovered to $1.4395.
GBP/USD printed session lows near $1.6300 - at $1.6285 before back to $1.6335.
USD/JPY weakened from Y83.80 to Y83.00. rate failed to break the figure that spurred the retreat to Y83.16.
The Labor Department is scheduled to release its latest reports on first-time unemployment claims and producer prices for March at 1230 GMT. Analysts expect initial claims to have edged higher by 3,000 to 385,000 claims last week, while producer prices are expected to have risen 1.1% in March.
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