* Euro rises to one-month high as Greece aid deal reached
* Funds winding down positions seen capping euro upside
By Chikako Mogi
TOKYO, Nov 27 The euro hit a one-month high in
early Asian trade on Tuesday after officials said global lenders
reached a deal on new debt targets for Greece, key to freeing up
the next installment of emergency aid.
The euro gained about 0.3 percent to $1.3008, its
highest level since Oct. 31. It last traded up 0.2 percent at
Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo,
said the euro's rise above Friday's high of $1.2991 prompted
players to trigger stops around $1.3.
But he cautioned, however, that the euro still faced
downside risks as the latest agreement does not offer a
fundamental resolution to the euro zone's debt crisis.
"The euro gained but the rise is small, and it's unlikely
that it will climb further, with big funds winding down their
positions ahead of the year-end. Any rise will be countered by
selling to cap the euro's upside," Maeba said.
Greece's international lenders agreed to reduce Greek debt
by 40 billion euros to 124 percent of gross domestic product by
2020 through a package of steps, sources said.
It was not immediately clear how the debt would be reduced
from its currently forecast level of 144 percent in 2020 to the
target of 124 percent, but it is expected to involve a series of
measures including an extension of the maturity and lowering of
interest rates on loans to Greece, a debt buyback and a return
to Athens of profits made by the European Central Bank on Greek
debt it holds.
Reaction in stock markets may be muted as an agreement was
expected and there has been a lack of progress in the United
States towards resolving the 'fiscal cliff'.
Republicans in the U.S. Congress on Monday called on
President Barack Obama to detail long-term spending cuts to help
solve the country's fiscal crisis, while holding firm against
the income tax rate increases for the wealthy that Democrats
Japan's Nikkei stock average is expected to trade in
a range after a recent fast-paced rise on the back of weakness
in the yen.
On Monday, global shares and the euro weakened as investors
cautiously awaited the outcome of the euro zone finance
ministers meeting with Greece's global lenders and amid the lack
of progress on U.S. fiscal issues.