FOREX-Euro hit by renewed Greek aid uncertainty

* Euro under pressure as Greek/German bond spreads widen

* Euro breaks through $1.33 (EUR=: ) before trimming losses

* Yen crosses extend gains, Aussie hits 19-mth high

(Adds quote, updates prices)

By Natsuko Waki

LONDON, April 26 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) across the board
on Monday as uncertainty intensified over how and when Greece
would get financial aid sought last week to avert a potential
sovereign debt default.

The spread between Greek and German 10-year government bond
yields hit a new 12-year high of 679 basis points on Monday,
indicating market concern over the implementation of the aid
package and the conditions attached to it. [ID:nLDE63P0IV]

Comments from Germany, potentially the biggest contributor
to any aid package, helped keep markets nervous after Greece on
Friday requested an aid package drawn up by the European Union
and International Monetary Fund be implemented.

German Finance Minister Wolfgang Schaeuble said Germany was
aiming to free up financial support for Greece before a May 19
deadline, but the opposition Social Democrats said they would
not back an accelerated parliamentary process to approve the aid
[nBAT005342].

“It’s not just about Greece but also what Greece means for
the rest of Europe. There’s clearly a lack of credibility with
the package. It’s not clear whether this is going to solve the
liquidity issue for Greece,” said Michael Hart, currency
strategist at Citigroup.

By 1130 GMT, the euro was down half a percent at $1.3313
(EUR=: ), having earlier broken through $1.3300. Asian central
banks were reported to be buying at that level and $1.3280,
providing further support.

The single currency has lost nearly 7 percent against the
dollar this year. Data on Friday showed currency speculators
boosted net short euro positions in the week ended April 20.
[IMM/FX]
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The euro fell (Read more about the trembling euro. ) 1 percent on the day against sterling
(EURGBP=D4: ), while the single currency also lost 0.2 percent
against the yen at 125.43 yen (EURJPY=R: ).

EVENT RISK

The yen faltered against commodity-linked and
higher-yielding currencies on expectations for global recovery.

The Canadian dollar hit 94.51 yen (CADJPY=R: ), its highest
since October 2008, and the Australian dollar rose to a 19-month
high of 87.59 yen (AUDJPY=R: ). Australian markets were closed.

There was also market talk of some yen selling in relation
to Japanese mutual funds investing in foreign high-yield bonds
launched on Friday, a trader at a Japanese trust bank said.

The U.S. dollar rose a quarter percent to a fresh three-week
high of 94.15 yen (JPY=: ) after last week’s robust data
reinforced expectations the Federal Reserve would raise interest
rates this year.

Near-term, a barrier for the dollar would be 95.10 yen,
which is a 61.8 percent retracement from 2009’s high at 101.45
yen in April down to a low of 84.82 yen in November.

The dollar index (Read more about the global trade. ) (.DXY: ), a gauge of its performance against
six major currencies, was up 0.3 percent at 81.586 after
touching a one-month high of 82.074 on Friday.

Investors will probably refrain from taking aggressive
positions before key events this week including monetary policy
meetings at the Fed and the Bank of Japan.

Investing Advice

(Reporting by Natsuko Waki and Tamawa Desai)

FOREX-Euro hit by renewed Greek aid uncertainty