Euro drifts lower on Greek default worries

Greek Finance Minister Yanis Varoufakis gives a speech during a banking conference in Athens, on Tuesday, April 21, 2015. Greek local authorities were on the brink of revolt Tuesday against the central government’s move to use cash reserves from state agencies — including hospitals and kindergartens — to help the country make ends meet. AP

TOKYO, Japan – The euro drifted lower Wednesday on fears about a Greek debt default as mayors across the country lashed out at a government decree ordering them to hand over their cash reserves to help Athens pay its bills.

In Tokyo, the single currency slipped to $1.0726 and 128.36 yen from $1.0735 and 128.42 yen in New York late Tuesday.

Greek Prime Minister Alexis Tsipras will meet German Chancellor Angela Merkel Thursday on the sidelines of a European Union summit, as Athens wrangles with creditors over a new rescue package.

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Tsipras’ cash-strapped leftist government is under pressure from fellow eurozone members and the International Monetary Fund to present details of reforms needed to unlock 7.2 billion euros in bailout funds.

The European Union has pressed Athens to detail a program of acceptable reforms by Friday, when eurozone finance ministers are due to meet in Latvia’s capital Riga.

But Athens has been resisting reforms demanded by creditors.

The dire state of Greece’s finances was laid bare as local mayors condemned the government order to hand over their reserves to help pay 3.0 billion euros in civil servants’ wages and debt-servicing costs in the next three weeks.

However, Eurogroup president Jeroen Dijsselbloem offered a glimmer of hope on Tuesday, saying some progress had been made in negotiations.

After the euro appeared last month to be on its way to hitting parity with the dollar for the first time since 2002, the embattled unit staged a rally, partly due to hopes for a Greek deal.

“The euro will struggle to rally (further),” said Matt Weller, an analyst at Gain Capital Holdings’ Forex.com unit.

“I wouldn’t be surprised if we edge back down to support at $1.05.”

Adding downward pressure on the euro, a leading survey showed German investor sentiment unexpectedly fell for the first time in six months in April as weak global growth hit confidence in Europe’s largest economy.

The widely watched investor confidence index calculated by the ZEW economic institute slipped by 1.5 points to 53.3 points in April, disappointing analysts’ expectations for a further increase this month.

The dollar climbed to 119.67 yen from 119.63 yen in New York after showed Japan posted its first monthly trade surplus in nearly three years in March.

“The overall trend is certainly gravitating towards wanting to own US assets,” Dean Popplewell, vice president of currency analysis and research at Oanda Corp, told Bloomberg News.