The euro slid to a
two-week low and a rally in European shares stalled on Wednesday after a
Greek official said the country may not make an upcoming repayment to
the International Monetary Fund.
The
euro's fall follows remarks from a European Central Bank board member
on Tuesday that the central bank could increase the pace of its
bond-buying in May and June, bringing its losses against the dollar this
week to as much as 3 percent.
"With Greek government liquidity particularly tight and reports suggesting the IMF payment on June 5th is under question, then we expect further turmoil ahead before any deal is ultimately reached," Royal Bank of Scotland rates strategists said in a note on Wednesday.
The euro fell as low as $1.1065 EUR= early on Wednesday, off almost three cents since ECB Executive Board member Benoit Coeure said this week that the bank may "moderately" increase its bond-buying programme in May and June.
The Greek government's parliamentary speaker said on Wednesday that Athens will not make a payment to the IMF that falls due on June 5 unless it has reached a deal with its creditors by then.
Euro zone government bond yields were also lower, widening the gap between benchmark U.S. and German yields further in favour of the dollar.
The 10-year yield spread moved out to around 169 basis points US10YT=RR DE10YT=TWEB, marking an increase of almost 20 basis points in just two days.
The dollar was broadly stronger as a result, also supported by punchy U.S. housing data on Tuesday. The greenback rose to a two-month high against the yen above 121.00 yen JPY=.
"With Greek government liquidity particularly tight and reports suggesting the IMF payment on June 5th is under question, then we expect further turmoil ahead before any deal is ultimately reached," Royal Bank of Scotland rates strategists said in a note on Wednesday.
The euro fell as low as $1.1065 EUR= early on Wednesday, off almost three cents since ECB Executive Board member Benoit Coeure said this week that the bank may "moderately" increase its bond-buying programme in May and June.
The Greek government's parliamentary speaker said on Wednesday that Athens will not make a payment to the IMF that falls due on June 5 unless it has reached a deal with its creditors by then.
Euro zone government bond yields were also lower, widening the gap between benchmark U.S. and German yields further in favour of the dollar.
The 10-year yield spread moved out to around 169 basis points US10YT=RR DE10YT=TWEB, marking an increase of almost 20 basis points in just two days.
The dollar was broadly stronger as a result, also supported by punchy U.S. housing data on Tuesday. The greenback rose to a two-month high against the yen above 121.00 yen JPY=.
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