Euro falls broadly in London

The euro fell broadly on Friday as concerns about the struggling Greek economy highlighted weakness in the eurozone and bolstered expectations interest rates in the region will stay low for months. The euro extended losses, hitting the day's low against the dollar, which briefly rose after JPMorgan reported higher-than-expected earnings per share in the fourth quarter.
Market confidence in Greece has fallen as its deficit has ballooned and credit ratings have been cut, weighing on the euro in the past couple of months. Analysts said the market was uncertain about how Greece would repay its debts, and that speculation remained high it would probably face difficulties pushing through any recovery plan.
"Concerns over Greece will weigh on the euro until the Ecofin's judgement on the government's latest fiscal plan," said Chris Turner, head of currency strategy at ING. The Ecofin group of European Union finance ministers will judge the plan next month at the earliest. Greece's fiscal problems were highlighted in comments from European Central Bank President Jean-Claude Trichet, who said on Friday Europe was facing a "major debt problem".
Trichet signalled on Thursday that eurozone interest rates would remain firmly on hold at a record low of 1.0 percent. The ECB kept them unchanged for the eighth month in a row, in line with market expectations. By 1305 GMT, the euro was down 0.8 percent on the day at $1.4377, near a session low around $1.4367 hit after JPMorgan Chase announced its earnings.
"Euro/dollar ticked lower on JPMorgan earnings per share coming in better than expected," said Adam Cole, global head of currency strategy at RBC in London. "This seems to be another piece of evidence that the dollar is trading better on good news rather than better on bad news." While the dollar initially rose against the euro, market participants said JPMorgan's revenues were lower than estimates while consumer lending remained weak, suggesting US banks are far from recovering from the credit crisis.
Against sterling, the euro fell to a four-month low of 88.11 pence. The single European currency had fallen sharply in Asia, on rumours, later denied, that German Chancellor Angela Merkel would resign. These followed the publication of a Time magazine report about her domestic political problems. The euro extended losses in Europe, but its 21-day moving average around $1.4380 was seen offering some support.
The dollar index rose 0.6 percent higher to 77.165 as the US currency was boosted despite weak US retail sales and jobless claims data on Thursday. Investors awaited US CPI numbers and the New York Fed's manufacturing survey later on Friday for clues about the pace of the US economic recovery.
The dollar fell 0.4 percent to 90.61 yen, its lowest in nearly four weeks, as the yen gained broadly on the back of a slide in higher-yielding currencies, which suffered from investors cutting back risky positions. The Australian the New Zealand dollars each fell around 0.6 percent against their US counterpart while dropping 1.0 percent versus the yen. The euro also fell 1.2 percent to 130.32 yen, its weakest in nearly four weeks.