FOREX-Euro gains on Greek aid hopes; concerns remain

* Euro recovers, supported by optimism on Greek aid package

* But lack of detail caps euro’s gains

* Solid euro zone data helps; Greek bond spreads narrow

(Adds quote, detail)

By Jessica Mortimer

LONDON, April 29 (BestGrowthStock) – The euro rose on Thursday,
rebounding from a one-year low the previous day on hopes a
bail-out plan for debt-stricken Greece would be finalised soon.

Gains were limited, however, as details of the Greece
package were thin, leaving uncertainties about the timing and
implementation of any deal.

Germany’s largest opposition party said it would move
quickly to approve German participation, while European Union
Economic and Monetary Affairs Commissioner Olli Rehn said the
European Union should complete talks “within days”.
[ID:nBAT005360] [ID:nBRU010773]

However, Rehn said he still could not provide details of the
deal, which he said were “conditional on fiscal consolidation”.

“Hopes about a package are providing relief for the euro,
plus the data was positive too,” said BNP Paribas currency
strategist Ian Stannard.

“But any rallies are proving to be short-lived because
details are still thin on the ground. The market’s hopes are
built up when a press conference is announced then they are
dashed again when there is no new information.”

At 1146 GMT, the euro (EUR=: ) rose 0.4 percent against the
dollar to $1.3264.

It was comfortably above a one-year low around $1.3112 hit
on Wednesday after Standard & Poor’s cut Spain’s credit rating
by one notch, a day after downgrades to Greece and Portugal.

But the low was hit only briefly, with investors focusing on
comments from a German parliamentarian that the aid package for
Greece would be worth 100 billion to 120 billion euros over
three years. [ID:nBAT005353]

“The market sees a bigger package for Greece, covering three
years, as a bigger backstop. This is helping to address some
investor fears and giving some support for the euro,” said
Kenneth Broux, market economist at Lloyds Banking Group.

The euro was also supported by euro zone economic sentiment
jumping much more than expected in April, pointing to
strengthening economic activity. [ID:nLDE63S0O1]

Spreads between Greek and German bond yields also narrowed
on optimism over prospects for a bailout, while an Italian bond
auction passed relatively smoothly. [GVD/EUR] [ID:nTAR001527].


A statement from the U.S. Federal Reserve, which offered a
more upbeat view of the U.S. economy, helped boost risk
sentiment and weighed on the safe-haven U.S. dollar and
low-yielding yen.

At the conclusion of its two-day rate setting committee
meeting on Wednesday, the Fed maintained its pledge to keep
interest rates low for an “extended period” and slightly
upgraded some of its economic forecasts. [ID:nN27125552]

“The FOMC did not rock the risk boat in any way whatsoever
and much of yesterday’s losses across different asset classes
were gradually faded,” UBS currency strategist Geoffrey Yu said
in a note to clients.

The dollar (.DXY: ) traded down 0.5 percent at 81.932, after
rallying to a near one-year high of 82.714 on Wednesday.

The yen was broadly flat versus the dollar (JPY=: ) at 94.03
yen, while euro/yen (EURJPY=R: ) rose 0.4 percent to 124.73 yen.

Investing Basics

(Additional reporting by Neal Armstrong)

FOREX-Euro gains on Greek aid hopes; concerns remain