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FOREX-Euro rises on Greece hopes before implementation vote

Published 06/29/2011, 03:01 PM
Updated 06/29/2011, 03:04 PM

* Euro gains after Greece passes first austerity vote

* Greece to vote Thursday on details of austerity measures

* Forthcoming U.S. labor market data could sway sentiment

(Updates prices, adds quotes)

By Wanfeng Zhou and Julie Haviv

NEW YORK, June 29 (Reuters) - The euro rose against the dollar on Wednesday after Greece's parliament approved austerity measures needed to avoid a default, but whether the government can implement them could limit the currency's gains.

Greek Prime Minister George Papandreou won a parliamentary majority in favor of a five-year austerity plan on Wednesday, clearing a major hurdle in Greece's bid to win access to international funding. For more see [ID:nLDE75S16H]

Expectations of a positive outcome had buoyed the euro this week and pushed it to a two-week high of $1.4449

Greece's government must now win approval on Thursday for legislation detailing specific implementation measures for the 28-billion-euro austerity package.

"The immediate reaction to the news seems to be a little bit of 'buy the rumor, sell the fact' type of reaction," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

"To some extent, investors have realized that this doesn't necessarily change the bigger picture for Greece or the euro zone. There are still a lot of questions about the effective implementation of austerity measures, given the backdrop of increasing public anger in Greece."

The euro was last at $1.4426, up 0.4 percent, with traders citing an options barrier with offers to sell at $1.4450. It had jumped 0.8 percent to 1.2048 Swiss francs

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The European Union and International Monetary Fund have insisted Greece pass both bills before disbursing the next 12-billion-euro tranche of Greece's bailout program.

The euro could find some support from interest-rate differentials as the European Central Bank is widely expected to raise rates in early July.

Recent comments from ECB President Jean-Claude Trichet underscore that the ECB is still on course to hike rates next week, according to Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

"The recent string of U.S. economic data has been relatively soft, and there is some downside risk to next week's U.S. employment data."

ADP's private payrolls data and the Labor Department's nonfarm payrolls report will be released on Wednesday and Friday next week, respectively. Both could sway market sentiment.

The Greek vote may offer a better opportunity to be long euros by early-mid next week, Chandler said.

"However, over the slightly longer-term, the European debt crisis is far from resolved, and the problems in Spain and Italy need to be monitored closely," he said.

The dollar fell 0.3 percent to 80.84 yen

A spike in oil prices lifted commodity-linked currencies, with the Australian

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