NEW YORK: The euro rebounded on Monday as investors took advantage of steep losses sustained during two days of dramatic selling, with the final push down to a fresh 11-year low coming after elections in Greece put an anti-austerity government in power.
Following the outcome of Sunday's vote, the euro hit its lowest against th
e US dollar since September 2003 at $1.1098 in Asian trading, according to the EBS trading platform . Greece elected, as expected, left-wing leader Alexis Tsipras of the anti-bailout Syriza party.
Tsipras's party won 149 seats in the 300-seat Greek parliament, setting Athens on a collision course with international lenders and potentially threatening its place in the euro.
In late New York trade, the euro was up 0.52 percent to trade at $1.1262, just off its high for the day of $1.1295. US trading activity dropped off significantly in anticipation of a major East Coast winter storm that grew in intensity on Monday and is expected to continue all day Tuesday.
"Everyone is really just concentrating on getting out of the office at this point. Market liquidity has died here so you can get things done but it is more difficult," said one trader.
The euro, however, is not expected to run too much higher given that the European Central Bank's announcement of outright money-printing last week had insulated European markets from the fallout of the Greek vote. "Everything that was priced in for euro negative has happened. We are already at a stronger level for the dollar. I don't see anything pushing the euro below $1.10 if the ECB and the Greek election couldn't do it. There seems to be some strong buying interest in the $1.1150/1.12 area," said John Doyle, director of markets at Washington, D.C.-based Tempus Inc.
The euro is still down 6.90 percent so far this year against the greenback.
It recovered 1.36 percent against the yen to 133.43 yen.
The dollar traded up 0.57 percent to 118.475 yen. The euro's biggest gain was versus the Swiss franc , against which traders have speculated the Swiss National Bank has intervened regularly since removing its 1.20 francs per euro cap on Jan. 15. The euro rose 3 percent to 1.01695 francs in late trade.
The dollar rallied 2.39 percent against the Swiss currency, topping out at 0.90330 franc in late illiquid trade.
Data on Monday showed sight deposits at the SNB rose sharply last week, normally an indicator the bank has been selling francs in the market.
The dollar advanced 6.74 percent to 68.57 Russian roubles after Standard & Poor's relegated Russia back to junk credit status for the first time in more than 10 years, citing weakened economic growth prospects.
Russian five-year credit default swap spreads, an insurance against default or restructuring, increased in price after the downgrade.
According to Markit, the price rose to 591 basis points from 552 on Friday.
"Russian CDS is expensive already.
They are priced for high risk. Generally it is a bad situation and they'll need a rise in the price of oil, but that doesn't look likely at the moment," said James Melcher, founder of macro hedge fund Balestra Capital in New York.
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