Euro Firm on Greek Hope

European majors remain generally firm in Asia today after rallying broadly on Greek speculations. There were rumors that political leaders were set to agree on the austerity measures yesterday, but such meeting with Prime Minister Papademos was delayed to today with one leader blaming the delay to 'missing paper'. Papademos has met troika last night on finalizing the terms for the EUR 130b second bailout. Meanwhile, there are reports that ECB is willing to accept some sort of haircut which could help Greece lower it's debt by EUR 11b. It's reported that ECB is holding EUR 50b of Greek bonds which it paid EUR 39b for. With certain mechanism, ECB could return the bonds to Greece, through EFSF, and get back EUR 39b. Effectively Greece would have lowered it's debt by EUR 11b. Anyway, so far, nothing is confirmed from nobody even though markets are positioning for further rally in European majors.

Yesterday, at the testimony before the Senate Budget Committee, Fed chairman Ben Bernanke stated that the US economy still has 'a long way to go before the labour market can be said to be operating normally' and 'particularly troubling is the unusually high level of long-term unemployment'. Despite the drop in unemployment rate in January, it remained high and probably will take a few years to reach the 7% level. This was probably the main reason for Bernanke not to change his monetary stance.

On the data front, Japan current account surplus came in wider than expected at JPY 0.75T. Eco watchers current reading dropped to 44.1 in January. UK BRC shop price index rose 1.4% yoy in January. Swiss unemployment, German trade balance and Canada housing starts will be released later today.

AUD/JPY is so far the stronger pair this month, up nearly 3%. The cross is even accelerating this week after RBA unexpectedly paused. Also, the cross is helped by broad based selloff in yen. Near term outlook remains bullish and a break of 83.94 resistance will pave the way to test 90.02 key resistance level. Note that firstly, in any case, as long as 72.03 support holds, medium term rise from 2008 low of 55.06 is still expected to resume sooner or later. But, secondly, decisive break of 90.02 is needed to confirm up trend resumption. Or, rise or fall is just a leg inside the sideway pattern.