Euro edges lower

The euro fell for a third straight session against the dollar and yen on Wednesday on worries about how a deal on Greek debt would be implemented and uncertainty over whether the United States would avoid the "fiscal cliff." The yen, which typically benefits during times of economic uncertainty, rose broadly, helped partly by reduced expectations of near-term monetary easing by the Bank of Japan.
International lenders agreed on a plan to cut Greek debt this week, allowing Athens to avoid a chaotic default. But the lack of details and scepticism on how Athens will implement the reforms needed to reach the new targets kept investors wary. German lawmakers and media accused the government of deceiving taxpayers over the true costs of saving Greece and said the euro zone would eventually have to write off much of its Greek debt. The Bundestag, the lower house of Germany's parliament, will vote on Friday on the deal, and approval is expected.
"Greece is insolvent, and Europe is playing a Ponzi game," said Stephen Jen, managing partner at SLJ Macro Partners in London. The euro fell 0.1 percent to $1.2938. Traders cited bids at $1.2870 and $1.2850, which could limit losses in the near term, with some attributing the euro's weakness to talk of dollar demand for month-end portfolio adjustments. Offers were cited at $1.2940. The euro zone's common currency pared some losses after US House Speaker John Boehner, a Republican from Ohio, voiced optimism that Republicans could broker a deal with the White House to avoid year-end austerity measures. But he repeated his opposition to raising income-tax rates. "The proof is still in the pudding, though, when it comes to actual action on the part of politicians," said Neal Gilbert, market strategist at GFT in Grand Rapids, Michigan.
Against the yen, the euro slid 0.3 percent to 106.04 yen, moving away from a seven-month high of 107.13 yen set on Monday. It also fell to a 2-1/2-month low against the Swiss franc, another safe haven, at 1.2024. It was last down 0.1 percent at 1.2034 francs. The dollar slid 0.2 percent to 81.96 yen, retreating from last week's 7-1/2-month high of 82.84 yen. Market players cited demand for the dollar at 81.70 yen, which could limit the yen's gains.
The yen rose as investors unwound long dollar and euro positions built in recent weeks on expectations that a fresh election on December 16 will result in the election of a new prime minister. The new Japanese leader is widely expected to put pressure on the Bank of Japan to further ease monetary policy.
The Japanese currency had lost about 4 percent against the dollar over the past two weeks as investors started to price in aggressive monetary policy action after the Japanese election. Shinzo Abe, who is likely to emerge as premier, has called for more aggressive easing, but some investors have begun to question how much impact he will have on monetary policy.