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FOREX-U.S. dollar, yen rise on Goldman, Greece worries

Published 04/19/2010, 12:18 PM
Updated 04/19/2010, 12:32 PM
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* Dollar, yen up on safety bid after Goldman charges

* Euro down on persistent Greek debt plan uncertainty

* EU, IMF Greece meeting delayed; Greek debt spreads widen (Updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, April 19 (Reuters) - The U.S. dollar and yen firmed on Monday as investors sought safety in low-yielding but stable currencies on worries over the fraud charges lodged against Goldman Sachs and as concerns grew about a delayed meeting to deal with Greece's debt.

The fraud charges filed against Goldman Sachs Group Inc by the U.S. Securities and Exchange Commission on Friday in connection with a debt product tied to subprime mortgages continued to reverberate throughout financial markets.

Stocks in Europe and Asia fell and benchmark government bonds and less-risky currencies rose.

"This is clearly a risk-averse market, with investors in a flight to dollar and yen assets," said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington.

"The main triggers are still the SEC's bombshell on Goldman Sachs and the continued uncertainty about the Greek debt situation, specifically as to how any aid package would be applied or whether Germany would veto the package."

The dollar and yen typically draw a safety bid in times of greater aversion to risk, given the United States' and Japan's normally stable banking systems and their standing as two of the world's largest economies.

Investors are worried about how a European Union- International Monetary Fund aid plan to help Greece avoid a debt default might be implemented.

Talks with EU and IMF officials, expected to start on Monday, were delayed to later in the week, Greece said, because of the volcanic ash cloud disrupting flights across Europe.

In midday New York trading, the euro traded down 0.3 percent at $1.3456 after earlier falling to $1.3415, its lowest in more than a week.

The euro zone currency also weakened against the yen, falling 0.3 percent to 124.10 yen after shedding around 1.5 percent late on Friday. Earlier, the euro fell as low as 123.18 yen, its lowest in about three weeks.

Traders said the 61.8 percent retracement of the February to April rally was the next support level at 122.75 yen.

The premium which investors demand to buy Greek government bonds rather than German benchmark bonds rose to record levels on Monday as uncertainty over the aid package unsettled investors. That has weighed on the euro as well.

The ICE Futures' dollar index, a gauge of the greenback's value against a basket of currencies rose 0.4 percent to 81.106, though it remains well below a 10-month high of 82.240 set in March.

Against the yen, the dollar was flat at 92.21. it had traded lower during most of the European session, but got a boost after a gauge of the U.S. economy's prospects compiled by The Conference Board, a private research group, hit a record high in March.

Technical analysts saw the next support at the 200-day moving average at around 91.35.

"It seems like we are reversing some of the risk aversion trades from this morning as people get more comfortable with the Goldman news," said Boris Schlossberg, director of FX research at GFT in New York.

"Clearly, there is a higher degree of caution. But there has been no additional bad news on Goldman. So for now, investors are in a 'see-no-evil, hear-no-evil' kind of mode."

The pound fell 0.6 percent to $1.5263 on persistent concerns that Britain's upcoming general election will produce no clear winner. Opinion polls ahead of the May 6 vote indicate growing support for the Liberal Democrats, the third party in the race. (Editing by Leslie Adler)

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