Euro slips while investors work on Greek deal details

The euro eased against the dollar yesterday as investors looked past the announcement of a second rescue package for Greece and measures to stop the debt crisis spreading, to focus on how it will be carried out. The euro had hit a two-week high of $1.4440 on electronic trading platform EBS but further gains were seen as limited, as analysts highlighted the risks to the deal being implemented quickly and questions over long-term debt sustainability. "What you saw yesterday was a relief rally as the initial numbers that came out were better than expected," said John Doyle, strategist at Tempus Consulting in Washington. "Now we're looking for details on how effective the plan might actually be." The euro was last at $1.43752, down 0.3 per cent on the day after jumping nearly 1.5 per cent on Thursday. Despite easing yesterday, it was on track for its first weekly gain against the dollar since the trading week ended on July 1. The Eurozone single currency jumped as high as 1.1894 Swiss francs, according to EBS data, around 4.5 per cent above the record low of 1.1365 francs hit at the start of the week as investors slashed safe-haven positions in the franc. It last traded at 1.1736, down 0.2 per cent. The dollar rose 0.1 per cent against the Swiss franc. "The deal is positive. A debt/growth deal is the only solution for an insolvent country and that is what the EU has done, but political and implementation risks remain," said Lena Komileva, global head of G10 currency strategy at Brown Brothers Harriman in London. The euro could extend gains against the dollar if concerns grow about the limited progress made by US lawmakers in budget talks ahead of an August 2 deadline to raise the US debt ceiling. The US currency also slipped to a four-month trough of 78.22 yen on EBS, the lowest since joint G7 intervention in mid-March to curb yen strength, before recovering to 78.39 yen, little changed on the day. Whle efforts to craft a $3-trillion (Dh11.01 trillion) deficit-reduction deal gained traction, the White House and Republicans have not broken impasse over higher taxes. Analysts said the risk of the Greek crisis spreading to other indebted Eurozone countries would remain if Spanish and Italian funding costs fail to reverse a recent spike. "We could see some more euro/dollar upside in the near term ... Beyond the next few weeks, however, we suspect that the upside in euro/dollar could be difficult to sustain," said Valentin Marinov, currency strategist at Citi in London. from / Gulf News