TOKYO, Feb 16 ― The euro edged up today on hopes that Greece and Euro zone finance ministers will find common ground to support Greece beyond the expiry of the current bailout programme at the end of February.
Ahead of Euro zone finance ministers' meeting today, Greece said it was confident of reaching agreement in negotiations with its euro zone partners, while reiterating it would not accept harsh austerity strings in any debt pact.
“I think the market is pricing in a positive outcome today, such as an agreement to extend support for Greece,” said Koichi Takamatsu, the head of forex trading at Nomura Securities.
The common currency, which has been drifting in a slim US$1.1262-1.1534 (RM4.0182-4.1155) range in the last few weeks due partly to uncertainties over Greece, traded at US$1.1411, up 0.2 per cent from late US levels.
Many investors have expected euro zone policymakers to reach a compromise at the end of the day as failure to do so could lead Greece to leave the euro, which would be a major setback for the currency union.
But Barclays analysts suspect there would be more volatility in store for the euro no matter the outcome. A Greek exit, needless to say, would be unambiguously negative as it would increase the apparent risks of instability in the Euro zone.
“An agreement with significant concessions for Greece may raise the perception of risks in Spain, resulting in significantly greater downside risk for EUR,” they said.
Finally, a deal with little relief for austerity or debt could pose some short-term upside risk for the euro and potentially slow its descent in the coming months, they added.
Against the yen, the euro stood at 135.40, a tad firmer from late US levels on Friday but still off a three-week peak of 136.70 reached last Thursday.
The dollar slipped to ¥118.60, dipping from 118.70 at the end of last week and recoiling from a one-month high of 120.48 set last Wednesday.
“Because many countries took monetary easing steps, the BOJ's stance is becoming less outstanding,” said Nomura's Takamatsu.
The European Central Bank, and other central banks from Canada, Sweden to Australia have took stimulus steps in recent weeks.
Speculators are indeed scaling back bets against the yen they made on expectations of easy policy stance by the Bank of Japan.
Data from US financial watchdog showed speculators' net yen selling positions have shrunk to the lowest level since July.
The yen showed muted response to data showing slower-than-expected recovery in Japan's economy in the quarter ending in December.
On the other hand, sterling scaled a six-week peak, following recent hawkish-sounding comments from the Bank of England.
The pound climbed as far as US$1.5437 in early trade, from around US$1.5407 late on Friday in New York, reaching a high last seen on January 2. It was last at US$1.5433.
Investors have been warming to sterling after relatively hawkish signals from the BoE recently. Both Governor Mark Carney and his deputy, Ben Broadbent, have said the next move in interest rates is likely to be up.
Martin Weale, a policymaker at the central bank, added some sense of urgency by saying the bank will need to start raising interest rates sooner than investors expect as inflation recovers from current low levels.
The New Zealand dollar gained about a half per centage point to US$0.7493 after surprisingly strong local retail sales data, hitting a three-week high of US$0.7502 at one point.
Among commodity currencies, the Canadian dollar fared well as the recent slump in oil showed signs of having bottomed out. On Friday, Brent crude hit a 2015 high above US$60 a barrel .
The loonie traded at C$1.2426 per USD, near a one-week high of C$1.2422 set on Friday. Its Australian peer was also firmer at US$0.7773, holding above last week's trough of US$0.7644.
Central bank minutes from Australia, the United States and Britain are on offer this week, while the Bank of Japan holds a policy review.
But trading could be slow as US markets are shut today for the Presidents' Day holiday, while many centres in Asia will be closed later this week for the Lunar New Year holidays. ― Reuters
