FOREX-Euro softer on Greece; Aussie jumps after RBA surprise
07/02/2012 at 05:45
* Athens baulking at accepting painful terms for new package
* But markets optimistic Greece will secure rescue deal
* Aussie hits 6-mth high as RBA keeps rates on hold
* Japan finmin repeats yen strength warning
* Tokyo sold Y1 trln in stealth intervention Nov -Japan MOF
By Antoni Slodkowski
TOKYO, Feb 7 Reuters - The euro nudged lower on Tuesday in Asia, though most traders clung to hopes Greece would finally clinch a rescue package despite its politicians postponing a decision to accept painful terms by yet another day.
The Australian dollar
Failure to secure the 130 billion euro $170 billion rescue for Greece would risk a chaotic debt default and destabilise the entire euro zone, an outcome deemed too extreme to contemplate by many experts.
These hopes have kept the euro bears in check for now, resulting in a volatile but resilient single currency. It stood at $1.3101
"The $1.3230 area has proved strong resistance on a number of occasions, so once the Greek deal is reached the euro will most likely test it again," said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ.
European Union officials say the full package must be agreed with Greece and approved by the euro zone, European Central Bank and International Monetary Fund before Feb. 15 to allow for complex legal procedures involved in the bond swap to be completed by a March 20 bond redemption.
"But my sense is that the 1.3230 barrier will hold anyway. Once we get there people are going to think beyond the agreement and re-focus on the still bleak outlook for the euro zone," Ino continued.
Analysts at Nomura Securities said they would not be surprised to see a squeeze higher in the euro in the very short term on the back of the extremely elevated speculative short positions.
Chartists said that possible renewed weakness in the euro may push it through support at $1.3020 which could see it drop to the Jan. 25 low of $1.2931 and then to $1.2857 -- a 61.8 percent retracement of its January rise.
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THE CUT THAT NEVER WAS
The Aussie dollar jumped as much of the market had been wagering on a rate cut. In a brief statement after its monthly policy meeting, the RBA did leave the door open to an easing if domestic demand weakened further, however.
Against the yen, the dollar gained 0.1 percent to 76.62 yen
It was well bid after Japan Finance Minister Jun Azumi said the country followed up its record yen-selling intervention last year with covert operations and that it is ready to step in again to counter speculative moves.
Data from the finance ministry confirmed earlier estimates that Tokyo spent roughly 1 trillion yen $13 billion in early November on undeclared forays into the currency market.
Spreads on dollar/yen risk reversal are rising in favour of dollar calls, with some players buying dollar calls as they bet on intervention by Japan. One-month dollar/yen risk reversal spreads are bid at 0.02
Additional reporting by Hideyuki Sano in Tokyo, Ian Chua and Reuters FX analyst Krishna Kumar in Sydney; Editing by Joseph Radford
antoni.slodkowski@thomsonreuters.com+81 3 6441 1130RM:antoni.slodkowski.thomsonreuters.com@reuters.net
Keywords: MARKETS FOREX