Euro up on hopes of Greek deal

The euro rose yesterday amid renewed optimism that Greece will reach a deal with its creditors while the yen hit a three-month high versus the US dollar for a third day, increasing speculation that Japan may step in to halt its rise.

Greek Finance Minister Evangelos Venizelos said talks with private creditors on a bond swap deal that is key to the country avoiding an unruly default were “one formal step away”.

The euro’s fortunes have waxed and waned inrecent days as investors focused on each new headline regarding Greece.

The euro was also helped by a eurozone manufacturing purchasing managers’ survey which was revised up, with German factories posting growth, and by decent demand at auctions of German and Portuguese debt.

“People are believing a Greek deal is imminent,” said Dean Popplewell, chief currency strategist at OANDA in Toronto. “They are probably over zealous on that and we are still in the same tight trading range.”

Athens must still convince international lenders it can push through spending cuts and labour reform, while concerns grow that Portugal, like Greece, will be forced to restructure its debt.

Analysts said the euro would need to breach technical resistance, the point it rarely moves above, around $1.3235, for fresh upside momentum.

Traders were on alert for possible Japanese intervention to stem the yen’s rise as the dollar fell to its lowest since the last intervention on Oct 31 against the yen, particularly as theeuro was still weak around the 100 yen level.