Greek Austerity Vote Lifts Euro

Greek Austerity Vote Lifts Euro





The euro strengthened against most of its major rivals in early European trading on Monday as the Greek government's austerity and debt-relief bill approval reignited risk sentiment in the market.
Greek Parliament approved a highly unpopular package of austerity measures amid nationwide protests on Sunday, paving the way for its international creditors to release EUR 130 billion in aid to the troubled euro member. A total of 199 lawmakers voted in favor, while 74 voted against.
The new bailout money would leave Athens with sufficient funds to repay a EUR 14.5 billion bond due on March 20. Last week, the troika --European Union, the European Central Bank and the International Monetary Fund --demanded more measures from Greece to receive the bailout money.
Equities gained in response to the latest developments in Greece, with the U.K. FTSE 100 index rising 0.90 percent, Germany's DAX climbing 0.82 percent and France's CAC-40 index advancing to 0.43 percent.
In economic news, German wholesale price inflation held steady in January, with the index of selling prices in wholesale trade rising 3 percent in January from a year ago. In January 2011, the annual growth was 9.4 percent. Month-on-month, wholesale prices climbed 1.2 percent after staying flat in December.
The euro advanced as high as 0.8404 against the pound before holding steady around 3:00 am ET, a few pips shy of Friday's 11-day high and its 62-day SMA level at 0.8408. If the pair strengthens further, it may challenge resistance its 38.2 percent retracement level in the 4-hour chart at 0.8455.
The Confederation of British Industry (CBI) lowered the growth outlook for the UK economy, but said that the country may avoid a technical recession.
The industry group cut the growth forecast for 2012 to 0.9 percent from 1.2 percent projected in November. The outlook for 2013 was trimmed to 2 percent from the previous forecast of 2.2 percent.
The CBI said, however, that the economy will avoid a technical recession after 0.2 percent contraction in GDP in the fourth quarter of 2011.
The euro also advanced to 103.20 against the yen and 1.3285 against the US dollar around 4:00 am ET. If the single currency strengthens further, it may find target levels at 103.35 against the yen and 1.3330 against the greenback.
Japan's gross domestic product was down an annualized 0.6 percent in the fourth quarter of 2011 compared to the previous three months. That missed forecasts for a contraction of 0.3 percent following the upwardly revised 1.7 percent increase in the third quarter.
On a yearly basis, GDP plummeted 2.3 percent - again well shy of forecasts for a decline of 1.3 percent after spiking an upwardly revised 7.0 percent in the previous three months. For all of 2011, GDP was down 0.9 percent on year following the 4.4 percent increase in 2010.
Meanwhile, an index measuring activity in Japan's tertiary industries was up a seasonally adjusted 1.4 percent on month in December at 99.7, the Ministry of Economy, Trade and Industry said. That was well above forecasts for an increase of 0.7 percent following the 0.8 percent contraction in November.
The euro that slipped to a 6-day low of 1.2085 against the Swiss franc in the Asian session moved in a tight range of 1.2104 and 1.2087 in early European deals on Monday. As of 4:50 am ET, the pair was hovering around the 1.21 area.
Swiss producer and import prices declined more than expected by economists in January, the Federal Statistical Office said today.
Year-on-year, the producer and import price index fell 2.4 percent, faster than economists' forecast of a 2.2 percent fall. Compared to the previous month, the index remained unchanged, while expectations were for a 0.2 percent increase.

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