FOREX-Euro gains in New York after Greek bill auction

* Greek T-bill auction well covered but with high yield

* Analysts say Greece still has tough times ahead

* Euro higher vs dollar but struggling
(Recasts, updates prices, adds comment; changes dateline,
previous LONDON)

By Nick Olivari

NEW YORK, April 13 (BestGrowthStock) – The euro rose in the New
York session on Tuesday after earlier falling to a session low
versus the dollar after results from a Greek Treasury bill
auction showed the market still required a high premium to hold
Greek assets.

Greece easily sold its allocation of 6-month and 12-month
T-Bills, raising 1.56 billion euros, with the inclusion of
non-competitive bids, but at a yield which was costly for the
debt-laden country. [ID:nLDE63C0FQ]

The euro rose briefly in the immediate aftermath of the
auction as traders reacted to a strong bid to cover ratio.

However, analysts said attention then shifted to the yield
Greece had to pay — more than double those paid at auctions in
January of bills with similar maturities.

“With the Greek bill auction behind it, the market may lack
a clear focus, but sentiment towards the euro remains poor,
even though there had been some short-covering in the futures
market in the most recent reporting week,” said Marc Chandler,
global head of foreign exchange strategy at Brown Brothers
Harriman in New York.

On Monday, the euro climbed to a near one-month high of
$1.3691 after euro zone finance ministers agreed on a financial
aid package for Greece, before paring gains as investors sought
clarification about the plan.

In early New York trade, the euro was trading at $1.3600,
up 0.1 percent on the day and recovering from a session low of
$1.3556.

Traders said a Swiss bank had been buying euros for an
option expiring later in the day.

“(The auction) does not really change the underlying
position that Greece has very tough times ahead, it’s going
through a deep recession and that’s going to lead the debt to
GDP ratio to surge higher,” said Ben May at Capital Economics.

Against the yen (EURJPY=: ), the euro slipped to trade down
0.3 percent at 126.25 yen, staying above its overnight low of
125.71, hit as investor caution crept in regarding the Greek
aid plan.

The draft of a policy paper from Japan’s ruling party,
released early in the European morning, initially put the
Japanese currency under pressure before focus shifted to other
risks and events.

The draft suggested the dollar (JPY=: ) should be kept around
120 yen. This pushed the greenback to the day’s high at 93.42
yen. [ID:nTKG006692]. It last traded down 0.5 percent at 92.83
yen.

PRICE FORECAST

But it was a volatile session for the dollar/yen pair with
the U.S. currency falling to its lowest in two weeks against
the yen in Asia trading. Some said a report that the Bank of
Japan may slightly revise up its consumer price forecast for
the next fiscal year helped the yen.

Bank of Japan Governor Masaaki Shirakawa later said annual
consumer price falls were expected to narrow as the output gap
shrinks but also that the central bank did not rule out any
policy option. [ID:nTKF106909]

The yen, sometimes used as a proxy for less liquid Asian
currencies, also remained sensitive to market expectations on
the Chinese yuan. Chinese President Hu Jintao told U.S.
President Barack Obama Beijing would “firmly stick” to its own
path for reforming the yuan’s exchange rate, the official
Xinhua news agency said.

Hu added the yuan’s gains would neither balance Sino-U.S
trade, nor solve the U.S. unemployment problem. [ID:nTOE63C00J]

Data showing a jump in imports of consumer goods and other
products widening the U.S. trade gap in February to $39.7
billion had little impact on foreign exchange trading. The
closely watched bilateral deficit with China was its lowest in
nearly a year, the government report showed. [ID:nN12139785].

Stock Market

(Additional reporting by Neal Armstrong in London)
(Reporting by Nick Olivari; Editing by Theodore d’Afflisio)

FOREX-Euro gains in New York after Greek bill auction