NEW YORK: The euro edged higher against the U.S. dollar on Monday after traders who had anticipated that Greece would fail to elect a new president took profits on short euro positions, while the greenback was higher against the yen on new Japanese stimulus.
Greek Prime Minister Antonis Samaras' candidate, Stavros Dimas, fell short of the 180 votes needed to become president, leaving the country facing an early national election that could derail its bailout program.
Traders who had "shorted," or bet against the euro in anticipation of such an outcome took some profits from their positions. But the boost to the euro was minor, as many traders remained short the currency on the view that the European Central Bank may bolster its monetary stimulus by announcing outright purchases of government bonds.
Greece's failure to elect a new president, and the resulting risk to its bailout program, "has largely been already reflected in the market positioning," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
He said traders who had expected such an event and shorted the euro on that premise "have made their money being short (the euro) and now they're buying it back."
The greenback gained against the yen following the Japanese government's approval on Saturday of a $29 billion stimulus package. The package was unveiled two weeks after a massive election victory by Prime Minister Shinzo Abe's ruling coalition gave him a fresh mandate to push through his "Abenomics" stimulus policies.
"Abenomics is back on track," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.
Activity was thin ahead of the New Year holiday, with many traders having already closed out positions. Japanese markets will be shut from Dec. 31-Jan. 2 and reopen on Jan. 5.
The euro was last up 0.14 percent against the dollar at $1.2193, but not far from a 28-month low of $1.2164 touched on Dec. 23. The dollar was last up 0.22 percent against the yen at 120.65 yen. The dollar was slightly lower against the Swiss franc at 0.9867 franc.
The dollar index, which measures the greenback against a basket of six major currencies, was near flat at 90.017 after hitting nearly nine-year highs last week.
On Wall Street, the benchmark S&P 500 stock index was last up 0.19 percent.
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