Euro gains on dollar for third day on Greek vote

NEW YORK: The euro gained for a third straight day Wednesday after the Greek parliament voted through an austerity package that should lead to the release of more bailout funds, averting an imminent debt default by Athens.

At 2100 GMT the euro was at $1.4429, up from $1.4367 late Tuesday.

"Europe and the world for that matter dodged a bullet today when the Greek Parliament approved an austerity plan," said Kathy Lien of currency specialists GFT.

"Rather than shooting higher on the relief that a default could be avoided, the euro fell aggressively in a classic buy the rumor, sell the news reaction," she noted about early trade.

"By the end of the day however, investors realized that the sovereign debt crisis is one step closer to ending which is why the euro was bid back to its pre-vote levels."

Lien pointed out that it was not the last step needed before the International Monetary Fund and the European Union release the next tranche of bailout money, but she called it "good news because it is a step in the right direction."

"Temporary resolution of the Greek debt repayment problem should settle down global financial markets for at least a few weeks," said Frederic Dickson, chief market strategist at D.A. Davidson & Co..

"The bad news is that Greece will remain a problem child for the EU as the country's economy remains in a deep recession and Greek government debt stands at around 150 percent of GDP," he added.

Meanwhile growing worries over the stalemate in US debt and debt ceiling talks, five weeks before the US could be forced into default, has kept the dollar soft against the euro, traders said -- despite the end this week of the Federal Reserve's soft-money program to pump money into the system.

The pound rose to $1.6063 from $1.5997. The dollar fell against the Japanese currency, to 80.80 yen from 81.08 yen, while it gained to 0.8343 Swiss francs from 0.8319.

Copyright AFP (Agence France-Presse), 2011