Euro rises in New York

The euro rose against the US dollar on Thursday as hopes a Greek bond swap deal could be within reach boosted investor sentiment and risk tolerance. National central banks within the euro zone are set to exchange their holdings of Greek bonds into new bonds in the run-up to a private sector debt deal to avoid any forced losses, euro zone sources said on Thursday. The swap is to happen over the weekend.
If a deal for a Greek debt swap is completed by Monday and followed by details of a second bailout, the euro could push back above $1.33, said Kathy Lien, director of research at GFT Forex in Jersey City. "The possibility of some concrete progress is reinvigorating risk appetite and pushing up the euro," said Lien. "We're finally walking in the right direction."
The eurozone common currency traded as high as $1.3148 against the dollar on Thursday, well off the session trough of $1.2973, the lowest since January 25. The peak was well past psychological support at $1.30. The euro last traded up 0.6 percent at $1.3144. The euro advanced against the yen, as well, trading as high as 103.77 yen, the highest since December 12. It was last at 103.76 yen, up 1.3 percent.
Still, euro buying remained "cautious" as markets waited to see a Greek debt swap and bailout deal actually take place, Lien said. "Investors have been short-changed too many times not to be careful," she said. The dollar traded as high as 78.96 yen. It last changed hands at 78.89 yen, up 0.7 percent. The dollar's prospects against the yen were boosted after it broke above the 200-day simple moving average this week. But some analysts said that until US two-year yields move higher, the greenback was likely to stay under 80 yen as long as the current global economic and political environment stays intact.
News of the possible eurozone bond swap relieved pressure on the euro after eurozone finance ministers failed on Wednesday to agree on a new bailout package for Athens, delaying a decision until Monday. Markets are still expecting Greece to avoid a disorderly default, said Ronald Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida.