By Deborah Levine and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) — The euro rose against the dollar Thursday, briefly topping $1.29, as debt talks in Greece appeared to be progressing satisfactorily and buyers lined up to buy Spanish and French debt.
The dollar index DXY -0.11% , which measures the U.S. unit’s value compared to six major currencies, fell to 80.393 from 80.540 late Wednesday
The euro EURUSD +0.16% rose to $1.2886 from $1.2852 in late n North American trading Wednesday.
Spain garnered enough demand from investors to sell more debt than it originally intended, and still pay lower yields. See more on Spain’s bond sales.
France also garnered good demand fro its medium-term bonds -- the first such auction since Standard & Poor’s stripped the country of its AAA rating. Read about France’s auctions.
Analysts said the demand for the debt of country’s under pressure from the markets can be attributed to actions taken by the European Central Bank. The ECB has made massive loans to banks and has been willing to accept sovereign debt as collateral, so banks are willing got buy the bonds and give them to the ECB to get loans.
“Markets love liquidity and this is reflected in a much better tone to risk sentiment as we get close to the end of the week,” said Kathleen Brooks, research director at Forex.com. “The successful French and Spanish bond auctions today should be expected since the ECB funding for banks relieves come pressure on Paris and Madrid to support their banks financially.”
Wednesday’s comments from the International Monetary Fund that it will likely push for another $500 billion in additional lending resources helped lift the euro, said Michael Derks, chief strategist at FxPro, in emailed comments.
Also helping the euro, traders with bets that it would fall more, “are becoming frustrated that their short positions are not delivering the goods,” he said.
Derks there was also a media report that German Chancellor Angela Merkel will float the idea of a euro-zone growth and competitiveness pact at the next meeting with French President Nicolas Sarkozy.
Along with the shared currency, European stocks rose, with hopes that Greece will reach agreement with private creditors over a key bond-swap deal also providing some support.
“It is just possible that the worm is turning for the euro, at least in the near term,” said Derks.
Against Japan’s yen, the dollar USDJPY +0.14% bought ¥76.96, up from ¥76.79 late Wednesday.
The euro also rose for a third day against the yen, coming off near-record low levels that some worried could trigger currency-market intervention by Japanese authorities. Read about euro, Japanese yen.
The euro EURJPY +0.31% rose to ÂĄ99.15 compared to ÂĄ98.71 Wednesday.
The British pound GBPUSD +0.11% rose to $1.5452 from $1.5438.
