FOREX-Euro volatile on Greek aid reports; dlr steady

May 10, 2011

By Neal Armstrong LONDON, May 10 (Reuters) – The euro pared losses in volatile trade on Tuesday on a media report, later denied, that heavily indebted Greece could agree a new rescue deal next month to help it meet its funding requirements in the next two years. The euro rose around half a cent to trade as high as $1.4376 after Dow Jones quoted a senior Greek official as saying that a new deal could be struck as early as June. [ID:nLDE7490LK] It later fell back after Greece denied it was discussing a new package and a German MP questioned whether Greece had met the terms for its next aid tranche, and was last trading around $1.4330, a touch softer on the day. Traders said a semi-official name was seen selling around the day’s highs. “This seems a bit early to come up with something concrete. I think we’ll get more posturing before a deal can be agreed on Greece,” said Gavin Friend, currency strategist at nabCapital.

Greece must follow the steps laid down in its budget adjustment programme before any additional loans can be considered, European Central Bank Executive Board member Lorenzo Bini Smaghi said on Tuesday. Asked about the possibility of a new loan being extended to Greece, Bini Smaghi said the Athens government had to press on with what had already been agreed. “Our view is that policy makers will probably not want to derail the European banking industry in the midst of stress tests, and further Greek aid will probably be forthcoming,” said Chris Turner, head of fx strategy at ING in a note. To read more, visit:

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