Foreign Exchange

Thursday, June 30, 2011 - 02:37

ASIA FX: US Dollar Pinned Down Near Day's Lows on Greek Vote

SINGAPORE, June 30 (MNI) - The U.S. dollar traded near session lows
in the Asian afternoon Thursday, weighed down by a revival in risk
appetite amid optimism Greece will be able to implement its proposed
package of austerity measures.

Overnight, Greece's parliament finally approved a controversial
package of austerity and privatization measures, the first stage in the

The approval of the austerity plan, which includes an unpopular E28
billion in spending cuts and tax hikes as well as a highly controversial
privatization plan pegged at E50 billion, came amidst protests in the
streets of Athens Wednesday and reports of increased altercations
between protesters and police.

Later Thursday, the Greek parliament votes again on the so-called
"enforcement law," which is needed to ensure that the measures -- once
approved -- are implemented.

That didn't dent investor sentiment for currencies like the euro,
and the Australian and New Zealand dollars this morning.

Euro-dollar broke above last night's $1.4449 high at the start of
the session and touched an initial high of $1.4485 before it then
stabilized between that and $1.4460.

The pair's upmove resumed again midway through the morning session,
with some dealers citing additional demand due to rumored Toushin, or
Japanese investment fund, launches for the fresh spurt.

Euro-dollar sliced through reported barriers at $1.4450 and $1.4500
this morning and struck a high of $1.4519, and it continued to hold near
that high through the afternoon, up sharply from $1.4425 near the U.S.
close overnight.

"The focus today will be on the second round of voting in the Greek
Parliament," commented United Overseas Bank analysts.

"Greek headlines will continue to dictate price action, and gains
may be limited by the fact that the Greek parliament will now start
debating the implementation of the austerity plan."

The Australian dollar also tracked euro's gains and was trading at
$1.0741 in the late afternoon ended here, after marking a $1.0668 to
$1.0747 range.

Aussie-dollar initially struggled to break clear of $1.0700, as it
ran into resistance at $1.0715 and repeatedly slipped back, before
finally rallying through to the morning high as the New Zealand unit
also climbed.

The NZ dollar, or Kiwi, put in a more impressive performance as it
rose to a new post-float high of $0.8319 in the late morning here, after
a morning low of $0.8247.

Kiwi was also boosted by the NBNZ's monthly business survey which
showed firms had raised their pricing intentions, which suggests
inflationary pressures ahead, said BNZ currency strategist Mike

As such, the market had slightly raised its expectations for rate
hikes, with 65 bps of rate hikes factored in for the next one year, up 4
bps from yesterday. Near-term resistance for kiwi is around $0.8400
while support is now at $0.8220, he added.

Dollar-yen meanwhile was also holding near the lows for the day
ahead of the Asian close, trading at Y80.35, in a Y80.31 to Y80.87

With Greece and the other peripherals moving onto the back burner
for now, market attention shifted to the remaining global data of the

"Markets are set up for a summer bounce, supportive news on growth
and Greece over the next ten days allowing," commented UBS analysts.
"Any Greek solution that would get the IMF to release EUR12 billion to
Greece in July would leave everyone alive to fight another day."

In the U.S. Thursday, the market will home in on Chicago purchasing
managers data, due out at 09:45 a.m. EDT.

The median estimate in a Market News International survey of
economists looks for Chicago PMI to slip to 53.0 in June from 56.6 in
May. Estimates range from 49.5 to 56.0.

Friday brings the start of a new month, and also a slew of global
PMIs, including from regional economic powerhouse China, which would be
eyed for additional insight into whether the global economy is bouncing
back or slowing.
** Market News International Singapore Newsroom: 65-6304 5258 **

[TOPICS: M$A$$$,M$$FX$,MNEF04]

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