The euro edged up
on Monday on hopes that Greece and euro zone finance ministers will
find common ground to support Greece beyond the expiry of the current
bailout program at the end of February.
Ahead of euro zone finance ministers' meeting on Monday, Greece said it was confident of reaching agreement in negotiations with its euro zone partners, while reiterating it would not accept harsh austerity strings in any debt pact.
"I think the market is pricing in a positive outcome today, such as an agreement to extend support for Greece," said Koichi Takamatsu, the head of forex trading at Nomura Securities.
The common currency, which has been drifting in a slim $1.1262-1.1534 range in the last few weeks due partly to uncertainties over Greece, traded at $1.1411 EUR=, up 0.2 percent from late U.S. levels.
Many investors have expected euro zone policymakers to reach a compromise at the end of the day as failure to do so could lead Greece to leave the euro, which would be a major setback for the currency union.
But Barclays analysts suspect there would be more volatility in store for the euro no matter the outcome. A Greek exit, needless to say, would be unambiguously negative as it would increase the apparent risks of instability in the euro zone.
"An agreement with significant concessions for Greece may raise the perception of risks in Spain, resulting in significantly greater downside risk for EUR," they said.
Finally, a deal with little relief for austerity or debt could pose some short-term upside risk for the euro and potentially slow its descent in the coming months, they added.
Against
the yen, the euro stood at 135.40 EURJPY=R, a tad firmer from late U.S.
levels on Friday but still off a three-week peak of 136.70 reached last
Thursday.
The dollar slipped to 118.60 yen JPY=, dipping from 118.70 at the end of last week and recoiling from a one-month high of 120.48 set last Wednesday.
"Because many countries took monetary easing steps, the BOJ's stance is becoming less outstanding," said Nomura's Takamatsu.
The European Central Bank, and other central banks from Canada, Sweden to Australia have took stimulus steps in recent weeks.
Speculators are indeed scaling back bets against the yen they made on expectations of easy policy stance by the Bank of Japan.
Data from U.S. financial watchdog showed speculators' net yen selling positions have shrunk to the lowest level since July.
The yen showed muted response to data showing slower-than-expected recovery in Japan's economy in the quarter ending in December.
The pound climbed as far as $1.5437 GBP=D4 in early trade, from around $1.5407 late on Friday in New York, reaching a high last seen on Jan. 2. It was last at $1.5433.
Ahead of euro zone finance ministers' meeting on Monday, Greece said it was confident of reaching agreement in negotiations with its euro zone partners, while reiterating it would not accept harsh austerity strings in any debt pact.
"I think the market is pricing in a positive outcome today, such as an agreement to extend support for Greece," said Koichi Takamatsu, the head of forex trading at Nomura Securities.
The common currency, which has been drifting in a slim $1.1262-1.1534 range in the last few weeks due partly to uncertainties over Greece, traded at $1.1411 EUR=, up 0.2 percent from late U.S. levels.
Many investors have expected euro zone policymakers to reach a compromise at the end of the day as failure to do so could lead Greece to leave the euro, which would be a major setback for the currency union.
But Barclays analysts suspect there would be more volatility in store for the euro no matter the outcome. A Greek exit, needless to say, would be unambiguously negative as it would increase the apparent risks of instability in the euro zone.
"An agreement with significant concessions for Greece may raise the perception of risks in Spain, resulting in significantly greater downside risk for EUR," they said.
Finally, a deal with little relief for austerity or debt could pose some short-term upside risk for the euro and potentially slow its descent in the coming months, they added.
The dollar slipped to 118.60 yen JPY=, dipping from 118.70 at the end of last week and recoiling from a one-month high of 120.48 set last Wednesday.
"Because many countries took monetary easing steps, the BOJ's stance is becoming less outstanding," said Nomura's Takamatsu.
The European Central Bank, and other central banks from Canada, Sweden to Australia have took stimulus steps in recent weeks.
Speculators are indeed scaling back bets against the yen they made on expectations of easy policy stance by the Bank of Japan.
Data from U.S. financial watchdog showed speculators' net yen selling positions have shrunk to the lowest level since July.
The yen showed muted response to data showing slower-than-expected recovery in Japan's economy in the quarter ending in December.
The pound climbed as far as $1.5437 GBP=D4 in early trade, from around $1.5407 late on Friday in New York, reaching a high last seen on Jan. 2. It was last at $1.5433.
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