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The euro weakened against the yen and the Swiss franc amid speculation a European Union pledge to stabilize the region’s economy won’t resolve a sovereign-debt crisis.
The 17-nation currency rose against the dollar after the Ifo index of German business confidence unexpectedly increased, curbing demand for the safety of U.S. assets. EU leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of austerity measures next week. European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo said the end of the crisis won’t happen soon.
“The ball is in Greece’s court and it’s difficult for the market to rally until we know it has won the point,” said Steve Barrow, London-based head of research for Group-of-10 currencies at Standard Bank Plc in London. “Our favorite way to play the euro weakness would be short euro against the Swiss franc.”
EU leaders urged Greece to pass a package of budget cuts and vowed to do what’s needed to meet the country’s financing needs, the group said in a statement in Brussels yesterday. Greek lawmakers must approve the 78 billion-euro package in a vote next week, a condition for receiving a fifth loan payment under an existing bailout and for future financing. Failure to secure aid would push Greece to the brink of default, with the country needing the funds to cover 6.6 billion euros of maturing bonds in August.
European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment.
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