Euro falls versus dollar, yen

The euro fell more than one percent versus the dollar and yen on Tuesday as investors cut exposure to the common currency after Greece's unexpected call for a referendum revived uncertainty over how the eurozone will solve its debt crisis. If the Greek people use the referendum to reject the latest bailout deal it would put the next aid tranche to Greece in jeopardy, moving it towards the brink of disorderly default, raising the risk of further contagion and financial market instability.
The dollar index was last trading up 1.5 percent at 77.293, while the euro slid more than 1 percent versus the dollar to a low of $1.3671, triggering stops below $1.3680. Traders cited Russian speculators and Swiss names selling the single currency in early European trade and said key support came in around $1.3650, the October 18 low. A close below that level would leave the euro vulnerable to a test of its early October trough around $1.3145.
The risk-correlated Australian dollar fell more than 2 percent to a low of US $1.0294 after the central bank cut interest rates to 4.5 percent, with interest rate futures suggesting investors were braced for further easing. The dollar dipped slightly versus the yen, however, having pulled back from a three-month high as the impact of Japan's massive intervention on Monday faded a touch. It last traded down 0.1 percent at 78.12 yen, with market players wary of further yen selling by the Japanese authorities.
The single currency was also down 1.1 percent versus the yen at 107.05, erasing some of the gains made during intervention. "The Greek referendum is a real curve ball, nobody saw it coming and it injects a lot of uncertainty," said Steven Saywell, head of FX strategy at BNP Paribas.
Some analysts said investors would be wary of buying the dollar too aggressively given a two-day Federal Reserve meeting that concludes tomorrow and key US jobs data due on Friday. Any hints that the Fed is considering further monetary easing to boost the flagging economy could drive the greenback lower. Trading in dollar/yen steadied after Japan's yen-selling intervention on Monday. It backed off the three-month high of 79.55 yen hit the previous day but held well above levels seen before intervention of around 75.65 yen or so.
The dollar briefly surged around 60 pips or so to an intraday high of 79.10 yen during Asian trading on Tuesday but quickly gave back its gains, and traders said the rise was unlikely to have been caused by intervention. Bank of Japan money market data suggested that around 7.7 trillion yen ($98.7 billion) was sold in Monday's intervention, well above previous record of 4.5 trillion yen set in August.