Surprise - euro hits one-month high as Greece crisis deepens

Demonstrators outside the parliament in Athens, Greece, take part in a rally demanding that Greece remains in the Eurozone on June 18, 2015. PHOTO: EPA

NEW YORK (AFP) - The euro hit a one-month high on Thursday amid growing uncertainty about Greece's debt crisis after European talks ended without a bailout deal.

The euro rose to an intraday high of US$1.1436 as Greek and other eurozone finance ministers held debt talks in Luxembourg, trying to break the five-month-old standoff between the anti-austerity government in Athens and its European Union and International Monetary Fund creditors.

The EU-IMF creditors have refused to pay the remaining 7.2 billion euros of the bailout if the Greek government fails to offer acceptable reforms. The bailout deal expires June 30, the same deadline for Greece's 1.5 billion euro debt payment to the IMF.

Without bailout relief, Greece faces a growing risk of default and an exit from the eurozone.

"The rise in the single currency 12 days before the June 30th deadline has many investors wondering whether a Grexit is a blessing or a curse for the euro," said Kathy Lien of BK Asset Management.

"The strength of the euro tells us one of two things - investors have faith that a deal will be reached or they think that the eurozone is better off without Greece," Lien said.

"The market is being complacent about that and we don't know what the ramifications will be, but the underlying basis here is that the market is unconcerned about Greece leaving," Boris Schlossberg, managing director at BK Asset Management in New York, told CNBC.

"The notion here is that if Greece leaves, it's like bad debt off your books, and is actually positive for the euro."

The US dollar, meanwhile, continued to extend its losses after the Federal Reserve's decision Wednesday to leave unchanged its zero-level federal funds interest rate, as expected, and predicted a more gentle rise in rates than previously signaled.

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