FOREX-Euro hits 6-1/2 month high vs yen, trims losses vs dollar

by on November 21, 2012 2:51 pm BST

Wed Nov 21, 2012 9:51am EST

* Prospects for Greek aid deal limits euro losses
    * Lenders to meet again next Monday to seek agreement
    * Dollar hits 7-1/2 month high vs yen, breaks above 82 yen
    * Euro crosses 105 yen for first time since early May

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 21 (Reuters) - The euro hit its highest in
more than six months against the yen and trimmed losses versus
the dollar in volatile trading on Wednesday as investors focused
on the progress being made by European leaders to reach an
agreement on Greek funding.
    Europe's common currency dropped earlier after Greece's
international lenders failed to reach agreement on releasing
emergency aid as they haggled over how to reduce the country's
debt to a sustainable level. 
     But the euro later trimmed losses after German Chancellor
Angela Merkel said she saw chances of a deal at a meeting of
European finance ministers on Monday. 
    "Perhaps the most important take-away from the failed talks
was that it appears to have spurred a tactical shift by
Germany," said Marc Chandler, global head of currency strategy
at Brown Brothers Harriman in New York. 
    "It seems more determined than it has been in making sure
that the Athens program remains intact."
    The yen, meanwhile, fell across the board on weak Japanese
export data and expectations of further monetary easing from the
Bank of Japan. It fell to a 6-1/2 month low against the euro and
a 7-1/2 month trough versus the dollar on Friday.
    In early New York trading, the euro climbed to a peak of
105.82 yen, its highest since early May. It was last
at 105.54 yen , up 0.8 percent.
    Against the dollar, the euro was flat at $1.2814, off
a session low of $1.2736.
    Camilla Sutton, chief currency strategist, at Scotia Capital
in Toronto said the euro stands to benefit should there be
position-squaring leading into the U.S. holiday weekend as the
market is currently short the single euro zone currency.
    Markets are closed on Thursday due to the U.S. Thanksgiving
    Sutton expects the euro to trade in narrow ranges in the 
near term, closing the year around $1.27 and trending lower in
2013, possibly closing at $1.25.     
    The single currency has also been under pressure from recent
economic data showing the euro zone is in recession and from
uncertainty over Spain. Madrid has not yet requested the
financial aid many in markets think it needs and the country
faces a secessionist threat in a regional election on Sunday in
    The dollar rose as high 82.53 yen, its strongest
level since early April as the main opposition Liberal
Democratic Party, tipped to win in a parliamentary election next
month, pledged to push for further easing by the BOJ.
 It last traded at 82.31, up 0.8 percent.
    The dollar broke through reported options barrier at 82 yen,
triggering stop-loss orders. It was the dollar's sixth
consecutive day of gains against the yen
    The yen was also hurt by data showing Japanese exports
declined for a fifth month in succession, fanning concern the
country may be slipping into recession. 
    "The obvious target on the upside is the 84 yen level, the
high set in February this year. That is certainly feasible now
given the moves we have had in recent days," said Derek
Halpenny, European head of global currency research at Bank of
Tokyo Mitsubishi.
    The Australian dollar also rose to a 7-1/2 month high of
85.42 yen. It last changed hands at 85.28, up 0.5