On Wednesday the euro trimmed morning gains as more tension grew over the Greek debt talks. Reports said that Greece’s creditors had rejected the latest reform proposal, driving a selloff in Greek bonds and European equities.
EUR/USD was last at 1.1205, off highs of 1.1235 hit earlier in the day.
The yield on the 10-year German bund was down 3.2 basis points to
0.838%, according to Tradeweb data.
The yield on the Greek 10-year was up 25.6 basis points to 10.889%, after moving lower all week on hopes a deal was imminent. Bond yields rise as prices fall.
Market sentiment was dampened after a Greek government official said Greece's Prime Minister told that some of Greece's latest proposed reform measures had not been accepted by creditors.
Greece's economy minister, George Stathakis, said earlier that "two or three" matters still needed to be discussed, but added that he was confident a deal would be reached by the time EU leaders meet on Thursday.
Greece's Enikos newspaper has reported that the IMF presented Greece with new counter-proposals. They keep insisting on tighter pension and VAT reforms - to yield a full 1% of GDP, and a smaller rise in corporation tax. The IMF also wants early retirement rules to be stricter, and and end to lower VAT rates in Greek islands (a red line for Tsipras’s coalition partners).
As the Guardian just reported, a senior German official has told Reuters that any aid-for-reforms deal with Greece must be supported by the International Monetary Fund. It was important for Berlin to have the IMF at the table, both for its expertise and its role in financing Greece, the official said.
"Of course, the IMF’s “expertise” means it believes Greece needs debt relief - an issue Germany isn’t terribly happy about confronting at this stage."
At the moment Alexis Tsipras is having a meeting with the heads of Greece's creditor-countries and institutions.
June 30 is the deadline for Greece to repay € 1.6 billion to the IMF, otherwise it will face a default, which could trigger the country’s exit from the euro area.
EUR/JPY was last at 138.88, down from 139.17 earlier, while EUR/GBP was at 0.7118.
