November 30, 2012 / 3:20 PM / 5 years ago

FOREX-Euro shines on month-end buying, Greek deal approval

4 Min Read

* Yen falls vs dollar, euro, traders cite month-end selling
    * Euro hits 7-month high versus yen, 5-week high vs dollar
    * Expectations of BOJ easing add to demand to sell yen
    * Euro extends gains despite weak euro zone data

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 30 (Reuters) - The euro hit a seven-month high
against the yen and a five-week peak versus the dollar on
Friday, helped by month-end buying from Japanese importers and
approval of the latest Greek bailout deal by German lawmakers.
    Gains in Europe's shared currency came despite weak euro
zone data -- a sharp drop in German retail sales, fall in French
consumer spending, and a record-high unemployment rate for the
euro zone.   
    "The euro was happy to shrug off the dour economic news as
traders focused on end-of-month flows, the rise in yen crosses
and the swift passage of the Greek bailout deal in the
Bundestag," said Boris Schlossberg, managing director at BK
Asset Management in New York.
    The yen was pummeled across the board amid speculation
Japanese monetary policy could be aggressively eased when a new
government is formed. 
    Although main opposition leader Shinzo Abe, a front-runner
to become the new prime minister, seemed to have softened his
aggressive stance on Bank of Japan independence, he did
reiterate his desire for the bank to buy foreign bonds.
 Analysts said that helped push the yen lower
both against the euro and dollar.
    In early New York trading, the euro rose 7 percent
on the day to 107.34 yen. Earlier it climbed to 107.66, its
highest since late April. Market players cited month-end demand
for the euro from Japanese importers.
    Against the dollar, the euro was up 0.1 percent at
$1.2985, having earlier touched hit $1.3027, its strongest since
Oct. 23. Traders reported offers at $1.3040-50 which may limit
its gains.
     German lawmakers on Friday approved the latest Greek
bailout by a large majority, helping the euro's cause.
 
     "It looks like the market is buying into the fact that the
euro zone is kicking the can down the road and not allowing
Greece to default," said Carl Hammer, chief currency strategist
at SEB in Stockholm.
    "The euro is already above $1.30 and there may be scope for
more strengthening towards $1.32 or $1.34."
    The euro zone currency, however, dipped to session lows
against the dollar after weak U.S. personal income and spending
data. The data dented the market's risk appetite as investors 
sought the dollar for its safety appeal. 
    "The disappointing data has dampened the modest enthusiasm
that major economies are gaining strength," said Joe Manimbo,
senior market analyst at Western Union Business Solutions in
Washington. "The report also  reinforces the fact that U.S.
growth in Q4 would be weak." 
    The dollar climbed 0.6 percent to 82.63 yen, close to
a near eight-month high of 82.84 yen hit last week, and up more
than 3 percent on the month.
    Market players said uncertainty over whether U.S.
policymakers can reach a deal to avert a looming "fiscal cliff"
of tax hikes and spending cuts may also temper dollar gains
against the yen, although many still expected weakness in the
Japanese currency to persist.

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