Euro gains on burst of shortcovering, Aussie up

By Anirban Nag

SYDNEY (BestGrowthStock) – The euro jumped in early Asian trade on Monday on a bout of short covering by investors, extending broad gains made late last week after euro zone leaders approved a safety net for debt-laden Greece.

Traders said the euro charged to as high as $1.3530 in early trade, as stops above $1.3430, $1.3450 and $1.3500 were triggered in thin volumes. While there was no news driving the euro higher, the market has been sitting on record short positions and some of that got squeezed on Monday.

The single currency had gained over 1 percent Friday, with some investors rushing to cover short positions in the euro/Australian dollar and euro/yen pairs.

As the morning progressed the euro lapsed back to $1.3441, having never tested resistance around $1.3570, which was the intra-day high on March 22 and 23.

Still, some thought the bounce could have wings.

“For the next month, the euro looks to have cleared a breathing space,” JP Morgan said in a report.

“Greece has secured its backstop from Europe and should proceed with its fiscal program. The skeptics may be right long-term, but for the next month, we suspect the euro will edge higher.”

Last week, euro-zone policy-makers agreed on an aid package under which Greece would receive both bilateral loans from euro-zone partners and funding from the International Monetary Fund if it faced severe difficulties.

While the plan is seen as a short term positive for the euro, longer-term worries about Greece and other fiscally vulnerable economies in the region, such as Portugal and Spain, remain. Concerns about Greece’s fiscal health have driven the euro down more than 6 percent versus the dollar this year.

The dollar index (Read more about the global trade. ) (.DXY: ) was down 0.23 percent at 81.48. All eyes this week are on the U.S. non-farm payrolls data, due out on Friday.

The consensus is for a gain of 190,000 jobs in March, the second month of jobs growth since the recession started in December 2007, and the largest increase since March of that year.

“The influential U.S. payrolls report for March is likely to show a steep rise in job creation this week, though it is mainly a ‘snap back’ from the snow-storm-induced fall in February,” said Joseph Capurso, currency strategist at Commonwealth Bank.

The yen was steady at 92.44 per dollar with support seen around 92.96, its March 25 low. Industrial production data and the Tankan business survey are the key market movers from Japan this week.

The Australian dollar was slightly higher at $0.9245, from $0.9032 late in New York on Friday, with hawkish comments from Reserve Bank of Australia (RBA) Governor Glenn Stevens on Monday helping sentiment.

Stevens said that interest rates had been too low and could not remain at previous levels.

Stock Report

(Editing by Wayne Cole)

Euro gains on burst of shortcovering, Aussie up