Euro stalled as investors waiting for Greece verdict

Posted By on June 21, 2011

According to Reuters, euro clung to small gains on Tuesday as market players bet the euro zone will cobble together a plan to prevent Greece from defaulting on its debt, though its advance could stall ahead of a confidence vote on the government in the Greek parliament.

The euro was lifted by short-covering after Klaus Regling, chief of the European Financial Stability Facility, said on Monday that the bailout fund’s guarantees would be raised to 780 billion euro from the 440 billion that has just been rubber stamped by ministers.

“In the big scheme of things, market players are starting to believe that euro zone policymakers, especially German policymakers, will try to avoid a hard landing in Greece,” said Makoto Noji, senior strategist at SMBC Nikko Securities.

The euro was up 0.2 percent at $1.4332 , having risen as high as $1.4385 as short-term players tried to trigger stop-loss orders scattered around $1.4350, and extending its recovery from a three-week low of $1.4073 hit last Thursday.

“It’s all driven by short-term players. No one is buying the euro to hold it for a long time,” said Tsutomu Soma, manager of foreign bonds at Okasan Securities.

The euro pared gains after Fitch Ratings said it would regard both a Greece sovereign debt swap and a rollover of maturities, even a voluntary one, as default. […read me]