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Forex - EUR/USD gains on Greece hopes, awaits China PMI data

Published 10/31/2012, 08:53 PM
Updated 10/31/2012, 08:55 PM
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Investing.com - The euro firmed against the dollar on Thursday on hopes European policymakers may be moving closer to giving Greece more time to meet deficit-reduction targets.

Trading was choppy as the market awaited the release of Chinese purchasing manufacturer's indices due out later in the day.

In Asian trading on Thursday, EUR/USD was trading up 0.05% at 1.2966, up from a session low of 1.2962, and off from a high of 1.2969.

The pair is likely to find support at 1.2947, Wednesday's low, and resistance at 1.3020, Wednesday's high.

Eurozone finance ministers are mulling giving Greece more time to meet deficit-reduction targets, and hopes Greece will be granted an extension sent the euro rising against the dollar.

Nerves remained on edge, however, as Greece must strike a deal with creditors within a couple of weeks to tap fresh bailout funds and stay solvent.

The euro also saw support from Spanish Prime Minister Mariano Rajoy, who said he would not rule out asking for a bailout.

Requesting financial assistance would allow Spain to tap the European Central Bank's bond-buying program, which would lower yields in Spanish government debt auctions and ease credit conditions in the country.

Yields in Spanish bond markets have soared above 7% this year on several occasions, a level deemed unsustainable by the markets and suggesting the country is in need of a bailout.

Spain has been hesitant to request sovereign assistance over fears austerity measures likely demanded by creditors will be too harsh for a country already mired in recession.

China is due to release its latest purchasing managers' index later in the day, and trading remained choppy in the meantime.

The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.04% at 0.8038, and EUR/JPY trading up 0.17% at 103.55.

Later Thursday, the U.S. will release its weekly government report on initial jobless claims, as well as official data on nonfarm productivity and labor costs, important inflationary indicators.

In addition, the Institute of Supply Management is to publish data on U.S. manufacturing activity.






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