US
UK
Chinese
Japanese
Hong Kong
Australia
Spanish
Deutsch
Portuguese
Korean
French
Russian
Sponsorship Link
(Reuters) - The euro edged up on Monday after the Greek parliament approved an austerity bill that put the country a step closer to securing much-needed funds, though market players warned of more hurdles before lenders seal a bailout deal.
The 'yes' vote by Greek lawmakers, while largely expected, provided some relief as any failure to achieve this would have led to a default by Greece, shifting immediate market focus to how the euro zone, especially its paymaster Germany, will react.
"I'm not sure if it's time for a hurrah. It's still uncertain whether euro zone finance ministers will agree on the bailout at a meeting planned on Wednesday," said Masafumi Yamamoto, chief forex strategist at Barclays Capital.
The euro gained about 0.3 percent to $1.3235, recouping some of the losses made on Friday and about a cent below a two-month high of $1.3322 hit last week, with its 90-day moving average of $1.3314 seen as a major resistance point.
Must Read
Although the austerity bill passed the parliament, violent street protests in Athens and the departure of six Greek cabinet ministers underscored the difficulty of implementing unpopular steps.
Follow us
Euro zone finance ministers also expect Greece to explain how 325 million euros ($430 million) of this year's total budget cuts -- as yet unspecified -- will be achieved before it agrees to the bailout in a meeting planned on Wednesday.
NOT GOOD ENOUGH
Highlighting the exasperation on the side of Germany, the country's finance minister, Wolfgang Schaeuble, said in an interview with German newspaper Welt am Sonntag that Greek promises on austerity measures are no longer good enough because so many vows have been broken.
In addition, there are also concerns that hedge funds may have built up sufficiently large holdings of Greek bonds to scupper bond swap deals, termed private sector involvement (PSI).
On the other hand, the euro is likely to draw some support from signs of stability in other euro zone countries, with the spread of Portuguese bond yields over German bonds slipping to one-month lows.
Fear of a major banking crisis in Europe has subsided as the European Central Bank is offering to provide an unlimited amount of three-year loans for the second time later this month after the first such operation in December.
Against this backdrop, Institutional investors have been cutting short positions since January, said Kimihiko Tomita, head of forex at State Street.
"If you think there will be no Armageddon, there is no need to take new euro short positions now. But on the other hand, it's questionable whether investors will become so positive about the euro as to become net long," Tomita said.
As the Greek vote improved sentiment on risk assets, the Australian dollar also gained 0.5 percent to $1.0720, though it was off a two-month high of $1.0845.
