Reuters: US Dollar Report: CORRECTED-FOREX-Euro falls from 1-mo high; Greece relief impact fleeting

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CORRECTED-FOREX-Euro falls from 1-mo high; Greece relief impact fleeting Nov 27th 2012, 18:19 Tue Nov 27, 2012 1:19pm EST (Corrects first paragraph to second straight session from first time in five sessions) * EU/IMF agree on new debt target for Greece * Euro falls from 1-month high as market skepticism on deal grows * Dollar direction to hinge on fiscal cliff scenario * Yen weak after Japan opposition leader calls for bolder stimulus By Julie Haviv NEW YORK, Nov 27 (Reuters) - The euro fell against the dollar for a second straight session on Tuesday as a deal to rescue Greece spurred profit-taking amid ongoing worries about the broader euro zone. The single currency shared by 17 countries earlier rose above the key psychological level of $1.30, its highest level in a month, on news of an agreement between euro zone finance ministers and the International Monetary Fund to reduce Greece's debt. The deal paves the way for the release of Greece's urgently needed aid loans. Speculation that a deal for Greece would come to fruition caused the euro to notch its largest gain against the dollar since mid-September last week. The currency had appreciated by about 2 percent after gaining for two straight weeks. "Investors who were buying on the rumor have been selling on the news," said Brad Bechtel, managing director at Faros Trading in Stamford, Connecticut. "With the Greece news out of the way investors have been booking profits on the short-term euro gains," he said. "Month-end rebalancing is also playing a role today, with positioning in equities and bonds spilling over into the currency market." The euro last traded at $1.2934, down 0.2 percent on the day, well below a one-month high of $1.3009 struck earlier during the Asian session when the deal on Greek debt was reached. Data showing U.S. consumer confidence had risen to the highest in more that four years also buoyed the dollar. "Crosswinds, however, should keep the euro rangebound at between $1.28 and $1.30 until the end of the year," Bechtel said. After 12 hours of talks, international lenders agreed on a package of measures to reduce Greek debt by more than 40 billion euros, projected to cut it to 124 percent of gross domestic product by 2020. "The eyes of the financial world will closely watch Athens to see if it can follow through and implement more reforms to keep the bailout money flowing in the months ahead," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington D.C. "Failure to do so would risk another flare-up in the Greek debt crisis and open to door to renewed losses for the single currency." Analysts, however, said the Greek deal would provide only temporary relief as the worsening economic outlook for the euro zone, under relentless austerity measures, would keep the euro under pressure, especially against the dollar. "The initial reaction was positive for the euro as at first people were relieved that an agreement had been reached. But looking at the details, sentiment has turned a bit sour," said Niels Christensen, FX strategist at Nordea. "The problem for Greece might be solved for the moment but there are bigger problems like Spain, and with the dire growth outlook for the euro zone, that will be very difficult to solve." Christensen said the euro's failure to move decisively above $1.30 might have triggered some profit-taking on long euro/dollar positions. This could wind back the single currency's recent gains. Near-term support for the euro lay at its 55-day moving average of $1.29187. The dollar's direction in the coming weeks will be heavily swayed by whether U.S. lawmakers reach a sweeping deficit reduction agreement by the end of the year. A deal needs to be done to avoid the so-called "fiscal cliff" of tax increases and spending cuts due to take effect at the beginning next year. Congress and the White House, however, remain at odds on a deal, and the uncertainty that results typically boosts the appeal of the safe-haven dollar. BUY ON DIPS FOR YEN Japan's opposition leader, Shinzo Abe, who is likely to become the country's next prime minister after an election next month, reiterated calls for bolder monetary and fiscal stimulus to revive the country's economy. That is expected to keep the yen under pressure, despite its slight recovery on Tuesday. The Japanese currency has fallen sharply over past weeks on mounting speculation that a new government after Dec. 16 general elections will coerce the Bank of Japan into easing monetary policy aggressively. Data from the U.S. Commodity Futures Trading Commission showed that currency speculators increased their bearish bets against the yen in the week ended Nov. 20, a period when the Japanese currency began its slide. The dollar hit a 7-1/2 month high of 82.82 yen last Thursday. It last traded at 82.24 yen, up 0.2 percent on the day, according to Reuters data. (Additional reporting by Anooja Debnath in London; Editing by Dan Grebler) Link this Share this Digg this Email Reprints

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