FOREX: Euro Rises to Three-Week High Versus Dollar on Greek Debt, ECB Rate Views

The euro climbed to the highest in almost three weeks against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation as the risk of an immediate Greek default subsides.

The 17-nation currency strengthened to a 15-month high against the pound amid bets the Bank of England will be restrained in increasing interest rates compared with the ECB. Higher-yielding currencies advanced against the Swiss franc after German financial firms agreed on a draft proposal to roll over Greek debt holdings, according to people familiar with the plan. The Dollar Index weakened for a fourth day, the longest streak since April.

“There’s an element of optimism after yesterday’s vote and amid headlines surrounding Germany even though specifics are lacking,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York.

The euro rose 0.3 percent to $1.4480 at 9:02 a.m. in New York. It earlier strengthened to $1.4521, the highest level since June 10. The euro slipped 0.3 percent versus the Japanese currency to 116.28 yen after advancing as much as 0.4 percent. The dollar fell 0.6 percent to 80.28 yen from 80.78. The euro has gained 0.6 percent against the dollar this month and is up 2.3 percent in the quarter that ends today.

Greece’s Vote

Luxembourg’s Jean-Claude Juncker, who leads a group of euro-area finance ministers, said the Greek parliament’s decision yesterday paves the way for payment of the next aid installment from the region’s governments and the International Monetary Fund. The Swiss franc, a traditional haven from financial turmoil, fell against 14 of 16 major peers. It depreciated 0.3 percent against the euro to 1.2082 and was little changed against the dollar 83.40 centimes per dollar, from 83.42. German firms will commit to providing financing for a Greek aid package and an announcement is planned this afternoon, said people who declined to be identified because the talks are private. The draft could still be changed during a meeting today with Finance Minister Wolfgang Schaeuble and top industry executives, the people said. Even amid the debt crisis, the euro has proved the third best performer this year, supported by the ECB’s first rate rise in three years in April. It trailed only the Swiss franc and the Norwegian krone among 17 currencies.

Euro: Greek Parliament Passes Vote – EUR/USD Still Capped

Yes is the answer. The Greek parliament said “yes” on the first vote of the austerity measures. Violence continues outside the parliament.

EUR/USD now trades at 1.4391. Trading is very very choppy, but the pair stays away from the resistance line it challenged earlier. The vote hasn’t been completed yet, but there is already a majority.

Update: Vote completed. Speaker of the house announcing it. The score is 155:138. Votes went according to party lines, apart from 1 member of the ruling party that voted against, and one member of the opposition that voted for the measures. One member of the ruling Pasok party, Kourouplis, that voted against the measures, was immediately thrown out of the party after the vote. Also the opposition member was kicked out of her party for voting for austerity.Euro/dollar traded just under the 1.4450 resistance line before the vote. It moved up towards this line as it became apparent that the vote will pass: members of the Pasok party moved in line with the government, which also got support from the opposition.

Votes on implementation laws are expected tomorrow.

FOREX-Euro Near Week High on Bets ECB to Lift Rates

The euro was 0.3 percent from a one- week high against the dollar on speculation the European Central Bank will raise interest rates next week even as Greece struggles to avoid a default.

The 17-nation currency traded near a two-week high against the yen after ECB President Jean-Claude Trichet yesterday said policy makers are in "strong vigilance mode," boosting rate- increase expectations. Greece’s parliament today will vote on an austerity package needed to secure more financial aid. The dollar reached the strongest level against the yen in three weeks yesterday as Treasury yields jumped, enhancing the allure of U.S. assets.

“The euro’s got a bit more upside from here," said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s biggest lender. "While we hear a lot about Greece, it’s really a lot of noise because the bottom line is that the European economy is strong enough to get the ECB raising rates. The euro was at $1.4355 at 8:17 a.m. in Tokyo from $1.4371 in New York yesterday, when it reached $1.4397, the highest since June 22. It’s down 0.3 percent against the greenback this month and up 1.4 percent this quarter. The euro may reach $1.44 in the next day and will head toward $1.50 by the end of September, Capurso said.

The euro was at 116.41 yen from 116.58, after reaching 116.67 yen yesterday, the highest since June 14. The dollar fetched 81.10 yen from 81.12. It reached 81.27 yen yesterday, the strongest since June 2.

Anchor Inflation

The ECB raised its benchmark rate in April for the first time in almost three years, lifting it by a quarter point to 1.25 percent. The central bank will meet on July 7.

‘‘We’re taking the decision progressively to anchor inflation expectations,” Trichet said at a press conference in Amsterdam following a seminar with central bankers from the Asia-Pacific region. “As far as we’re concerned, we’re in strong vigilance mode,” he said, repeating a phrase the ECB uses to indicate a rate increase is imminent.

Greek lawmakers will vote on the austerity package and again later on a measure to implement it. Prime Minister George Papandreou won a confidence vote in parliament last week by a vote of 155-143.

Treasury 10-year yields gained 10 basis points to 3.03 percent yesterday, increasing the appeal of U.S. bonds to international investors. The difference between 10-year yields in the U.S. and Japan widened to 1.94 percentage points, the most since June 14, according Bloomberg data.