Forex - Euro weaker as markets brace for Greece debt default

Investing.com - The euro held weaker in Asia on Tuesday as the final day of the second quarter and the month of June has placed all eyes on Greece as its government prepares to default on sovereign debt obligations.

EUR/USD traded at 1.1197, down 0.34%, while USD/JPY changed hands at 122.47, down 0.06% and AUD/USD was quoted at 0.7681, up 0.01%.

A last-minute series of phone calls and offers failed to reach a breakthrough on Greece's debt package by early Tuesday in Asia, setting the stage for volatile markets.

Talk swirled about the outcome of a planned July 5 referendum with Greece's Prime Minister Alexis Tsipras hinting Monday he might resign if the Greek people vote in favour of the creditors' proposal.

"If the (Greek) people vote yes, then the referendum outcome will be completely respected but I will not serve it" Tsipras said in a television interview. "I'm not an all weather prime minister. I will respect the verdict and prepare the ground as outlined by the constitution and the parliament."

Earlier in the day on Monday, President Barack Obama spoke to France's President Francois Hollande, urging renewed efforts to reach a deal, and then European Commission President Jean-Claude Juncker reportedly made a refined proposal that was rejected by the Greek government with the current bailout due to expire June 30 and no extension on offer.

In Australia, HIA new home sales for May fell 2.3%, a sharp drop from a 0.6% gain month-on-month last month and official housing credit for May gained 0.5%, meeting expectations, while private sector credit also rose 0.5% month-on-month, again matching seen results.

In Japan, average cash earnings rose 0.6% in May, a tad below the 0.7% gain seen year-on-year, but the second straight increase.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.23% at 95.30.

Overnight, the dollar pared gains against a basket of other major currencies on Monday, even after data showed that pending home sales in the U.S. rose to the highest level since 2006 in May, as concerns over the deadlock in Greek debt negotiations slightly eased.

The National Association of Realtors said its pending home sales index increased by 0.9% last month, compared to expectations for a gain of 1.2%.

Pending home sales in April rose by 2.7%, whose figure was revised down from a previously reported gain of 3.4%.

The euro found some support after SNB Chairman Thomas Jordan said Monday the bank had intervened "in order to stabilize the markets," which were thrown into turmoil after Greece announced an emergency bank shutdown.

The Greek government ordered an emergency bank shutdown on Sunday night and the central bank moved to impose capital controls as the banking system neared insolvency after deposit outflows accelerated over the weekend.

Hours earlier the European Central Bank said it would continue providing emergency liquidity assistance to Greece’s banks, but capped emergency funding at current levels.

Greece broke off negotiations with creditors on Saturday and in a surprise move Tsipras called for a referendum to be held on July 5 on whether to accept the terms proposed by lenders for extending the country’s bailout.

European finance ministers refused a request from the Greek government to extend the bailout program, set to end on Tuesday, until after the referendum.

Athens is due to repay €1.6 billion to the International Monetary Fund on Tuesday but without a rescue package in place will almost certainly default.