Euro tumbles after Greece rejects proposal from Eurogroup: Feb 17, 2015

Market Review - 16/02/2015 22:56GMT 
 
Euro tumbles after Greece rejects proposal from Eurogroup

The single currency tumbled in North American session in thin trade (U.S. markets were closed due to President day holiday) on news that Greece rejected a draft proposal presented by the Eurogroup.

Greek officials said 'Greece rejected draft text that said Eurozone wud make use of flexibility in the current programme.'

Rejected draft seen by Reuters, stated 'called on Greece to refrain fm unilateral action; Greece wud commit to appropriate primary fiscal surpluses, any new measures shud be funded; Greeks indicated they intend to successfully conclude the programme shud be funded; Greeks indicated they intend to successfully conclude the programme, taking gov't plans into account; Eurogroup favoured 6-mth extension to availability of EFSF bonds in Greek bank bailout fund.'

Although the single currency traded with a firm bias in Asia and gained to session high at 1.1429 at European open, price retreated to 1.1395 in European morning. Intra-day decline accelerated on news of Greece's rejection and euro tumbled to an intra-day low at 1.1320 in North American afternoon.

Versus the Japanese yen, although the greenback opened lower and dropped to session low at 118.20 in New Zealand, price pared its losses and rose to an intra-day high at 118.79 ahead of Asian open. Renewed selling emerged there and pressured the pair lower to 118.37 in Asia, then to 118.28 in North American session.

Despite opening higher to 1.5435 in New Zealand, the British pound fell sharply to 1.5394 ahead of Asian open. Renewed support there lifted the pair and cable rose to an intra-day high at 1.5441. However, price pared its gains and tumbled to 1.5374 in European morning, then lower in tandem with euro to 1.5339 in North American session.

In other news, Eurogroup's Dijsselbloem says 'reaction of Eurozone ministers was slightly disappointment with no firm common ground with Greece; general feeling in Eurogroup is for Greece to seen an extension of bailout, we need more time; Eurogroup agrees best way forward is for Greece to seek extension of programme; this wud allow ministers several months for talks, request for extension wud have to come with commitments; request wud mean no roll-back of reforms unless agreed with Eurogroup; there shud also be a commitment fm Greece to successfully conclude the bailout; up to Greece to decide if they want extension, use the flexibility that it wud offer; next step has to come fm Greece; we can accept a request for extension still this week, extra Eurogroup on Friday, no later.' 
 
Data to be released on Tuesday:

Australia's RBA Meeting Minutes, China's House Prices, Italy's Trade Balance, U.K.'s CPI, PPI, RPI, Germany's Zew reports, U.S.'s Redbook, NAHB Housing Markets, Net L-T Flows, Overall Capital Flows.