WSJ:WORLD FOREX: Currency Traders Dither; Greek Turmoil Supports Dollar
--Currency markets lack direction; dollar makes small gains
--Euro still looking shaky amid Greek exit fears
--Emerging market currencies pare losses against the euro
By Eva Szalay
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Currency traders dithered in European hours Monday in a session with little discernible direction while underlying nervousness over Greece's future in the euro zone lent the dollar some support.
The greenback pared some of the losses sustained Friday against the euro and continued to trade below Y80 against the Japanese yen.
"For the moment there is simply not enough appetite to break the tight intraday ranges," said Citigroup in a note to clients. It cited a slightly better outlook for several currencies against the dollar, adding traders would see any rally as merely an opportunity to sell them at better levels, Citigroup said.
The euro stayed under pressure against major currencies as investor nerves jangle over whether or not Greece will elect on June 17 a government opposed to the nation's anti-austerity measures. That would further increase expectations Greece may be forced from the currency bloc and raise concerns investors could then lose faith in other indebted countries like Spain and Italy.
"Investors remain unconvinced by the potential effectiveness of firewall measures already in place to stem contagion from Greece exiting the euro," Bank of Tokyo-Mitsubishi UFJ currency analyst Lee Hardman, said in a note to clients.
That nervousness was seen in record-high costs to protect Spanish debt against default Monday after leaders from the group of eight major economies failed to initiate any major policy initiatives at a weekend summit.
"The G8 meeting delivered nothing of note for markets, beyond a little predictable disappointment," Societe Generale said in a research note.
Data Friday showed speculative betting on a dollar rally on the Chicago Mercantile Exchange rose to its highest level since at least 2007. Nearly all of the pro-dollar bets came against the euro.
Hopes that might, in fact, support the euro as traders were prompted to reverse those so-called short euro bets was played down by some analysts.
"Ordinarily such crowded short positioning should help to provide some support for the euro, however with the near-term risk of Greece leaving the euro unusually high, such positioning is likely to prove less of an impediment to further downside," Hardman said.
Emerging markets currencies pared some of Friday's losses and strengthened against the euro slightly, with the Hungarian forint and the Polish zloty being the standout performers in a very quiet session.
At 1042 GMT the euro traded at $1.2772 compared with $1.2783 late Friday in New York, according to EBS via CQG, and at Y101.29 from Y100.98 Friday. The pound traded at $1.5824 compared with $1.5830.
The dollar was at Y79.28 compared with Y79.03 and at CHF0.9402 from CHF0.9397.
The ICE Dollar Index, which tracks the greenback against a basket of currencies, including the euro, was trading at 81.140 from 81.084 late Friday.
A summary of key levels for chart-watching technical strategists is below:
