* Greece's lenders near agreement to release further aid
* Euro hits 3-week high vs dollar, 7-month high vs yen
* Against dollar, yen comes off more than 7-month lows
By Wanfeng Zhou
NEW YORK, Nov 23 The euro rose to a three-week
high against the dollar on Friday, heading for its second
straight week of gains, on hopes that Greece's lenders were
nearing an agreement to release further aid to help the
A rise in German business morale also boosted the euro,
although analysts said any euro strength should be limited given
the bleak economic outlook for the euro zone as a whole and
expectations that the European Central Bank will have to ease
Greece said the International Monetary Fund had relaxed its
debt-cutting target for the country, suggesting lenders were
closer to a deal for a vital aid tranche to be disbursed. But
other sources involved in the talks cautioned the funding gap
was far bigger than Greece has suggested.
"While we wouldn't want to understate the challenges of
reaching agreement on Greece, news reports have described some
of the remaining obstacles as technical and legal, and thus the
hurdles to a deal do not seem insurmountable," said Nick
Bennenbroek, head of currency strategy at Wells Fargo in New
The euro rose as high as $1.2943 on Reuters data,
breaking above resistance at $1.2910, its 55-day moving average.
It was last trading at $1.2941, up 0.5 percent on the day.
It also hit a seven-month high of 106.73 yen and
was last at 106.65 yen, up 0.4 percent.
Bennenbroek new reports suggesting euro zone finance
ministers will hold a teleconference on Saturday ahead of their
meeting on Monday, with the aim of speeding the process of
finding a financing solution for Greece, also lifted sentiment.
The euro has gained 2 percent against the dollar in the past
two weeks as yields on Greek bonds fell on expectations that
euro zone ministers should be able to sign off on another
tranche of aid for Greece on Monday.
"The market is getting a bit confident that a Greek deal
will be struck. This will remove one of the near-term
uncertainties in the euro zone and some of the short euro bets
will be squeezed as a result. But I do not see the euro rising
much beyond $1.30," RBS currency strategist Paul Robson said.
German business morale surprised with its first rise in
seven months in November. The Munich-based Ifo think tank said
its business climate index rose to 101.4 from 100.0 in October,
far surpassing even the highest estimate in a Reuters poll.
"The IFO was a bit of surprise, but these are levels which
we saw back in October and not really a turn in sentiment,"
Stuart Frost, fund manager at RWC Partners. "We expect the
euro's gains to fizzle out."
YEN CARRY TRADES?
The dollar fell 0.1 percent to 82.39 yen, pulling
away from Thursday's high of 82.82 yen, its strongest level
since early April.
The dollar has climbed nearly 4 percent against the yen in
the last two weeks, with the yen weakened by expectations that a
likely new Japanese government after an election scheduled for
December would push the Bank of Japan to implement more drastic
Shinzo Abe, the leader of Japan's opposition Liberal
Democratic Party, which is tipped to win the election, has
called for measures such as having the BOJ buy bonds issued
specifically to fund public works projects and pushing
short-term interest rates below zero.
His party's policy platform calls for a 2 percent inflation
target, and seeks to ensure that the BOJ will pursue it
vigorously with a possible revision to legislation that
guarantees the central bank's independence.
In an interview with the Wall Street Journal published on
Friday, Abe was also quoted as saying that he would consider
postponing sales tax increases agreed in August if the economy
remained mired in deflation.
Analysts said loose monetary measures along with lax fiscal
policies could keep the yen under pressure and could see
yen-funded carry trades return. Under these trades, investors
sell the low-interest rate yen to buy more higher-yielding
"Speculation is already growing that the yen will be the
funding currency of choice for 2013 carry trades - a view we
tend to support," Chris Turner, head of FX strategy at ING, said
in a note.