Global stocks stumble as Greece debt woes escalate

29 Jun 2015 | Author: | No comments yet »

Euro May Repeat Greek Referendum-Fueled Declines, Goldman Says.

NEW YORK The euro fell against most major currencies on Monday as a deterioration in Greece’s debt crisis moved the nation closer towards a default and possible exit from the euro zone. Still, the euro pared early losses against the dollar to climb nearly 1 percent, as some investors unwound trading positions by buying the euro, according to traders. In October 2011, when then-Greek Prime Minister George Papandreou floated the idea of a referendum on a private sector debt-restructuring plan, the euro slumped as much as 10.4 percent and short positions doubled in the next three months. A Greek official on Monday said Greece will miss a $1.77 billion debt repayment to the International Monetary Fund due on Tuesday, after the country’s European partners shut the door on extending a credit lifeline.

The latest referendum, called by Greek Prime Minister Alexis Tsipras, is on the terms attached to rescue aid followed months of impasse between the Greek government and creditors. The Swiss franc was up 0.15 percent against the euro EURCHF= to 1.0410 francs after being knocked from a four-week high of 1.0315 francs by the Swiss National Bank, which said it intervened in the market to weaken its currency. The 2011 vote was met with widespread opposition at home and was canceled the next month. “Tsipras is campaigning for a no vote — that dynamic is different and in principle much more euro-negative than it was back then,” Robin Brooks, chief currency strategist at Goldman Sachs Group Inc., said by phone. “The reality in my opinion is we’ve obviously gone to a place we didn’t think we’d go.” The single currency may weaken three cents if the crisis escalates, Brooks said. Any squeeze is therefore likely to be less aggressive and less accelerated than we have seen in the past.“ “There are investors that still hold out hopes for a more positive outcome,” said Omer Esiner, chief market analyst of Commonwealth Foreign Exchange in Washington.

The dollar was generally down as currency traders awaited Thursday’s U.S. employment report for June that may help trigger a rise in U.S. interest rates.

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