Euro Rallies as Greek Deal maybe Reached by Weekend

A potential infusion of funds into the IMF and reports Greece is near a haircut deal pushed EUR/USD to 1.2860s. The Swiss franc joined the euro as the top performer while USD and JPY trailed. Japanese retail data and Chinas leading index are highlights in the Asia-Pacific session. Premium longs in Cable, AUDUSD & EURJPY hit all targets, while EURUSD nears final target of 1.2870. Rest of trades remain in progress.

The euros fortunes continue to turn upward after as shorts cover after the Greek finance ministry said it could have a debt-swap deal by the weekend. The IMF also boosted sentiment, saying it hopes to raise an additional $600 billion.

Although the euro ended significantly higher on the day, the gains came in a choppy market. Frequent reports hit about large position covering in EUR/AUD, EUR/CAD and EUR/GBP shorts. Even after the US revealed it will not participate in efforts to boost the IMF, the euro continue to chop higher.

A fat finger in EUR/CHF sparked a nasty whipsaw but the pair eventually closed lower, pressuring the SNB.

Underlying optimism was also boosted by a series of US economic indicators. The NAHB housing index climbed to the highest since June 2007. Although industrial production was a tad below estimates at +0.4%, utilities were a major drag (due to weather). Growth in more cyclical areas like manufacturing was upbeat.

Asia-Pacific Preview

The calendar is generally absent of anything that could trigger a notable FX move but a few items are worth watching. At 0000 GMT, New Zealand follows up earlier CPI numbers with data on consumer confidence from ANZ. At 0200 GMT, the Conference Board releases its leading index for China. At 0530 GMT, Japan releases data on department store sales in December.

Premium longs in Cable, AUDUSD & EURJPY hit all targets, while EURUSD nears final target of 1.2870. Rest of trades remain in progress. Trades in USDCAD, USDJPY and gold remain in progress. Direct access to link

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