Euro holds gains from swing back to optimism on Greece, US job data awaited

The euro was little changed at US$1.1469 after surging 1.2 per cent overnight in a short covering rally. -- PHOTO: AFP
The euro was little changed at US$1.1469 after surging 1.2 per cent overnight in a short covering rally. -- PHOTO: AFP

TOKYO (Reuters) - The euro on Friday held onto gains made during the latest swing back to optimism in the Greek debt saga, while the market awaited U.S. non-farm payrolls later in the day for further cues.

The euro was little changed at US$1.1469 after surging 1.2 per cent overnight in a short covering rally, helped by reports that the European Central Bank agreed to fund up to 60 billion euros in emergency liquidity assistance (ELA) to Greece.

Views that the Swiss National Bank was buying euros to weaken the franc also supported the common currency.

The euro has experienced wide swings this week, as hopes that Greece could win swift relief from its creditors alternated with worries a deal cannot be reached, which raised the prospect the country might exit the euro zone bloc.

The European Central Bank stunned investors midweek by taking a hard-line stance, saying it would not accept Greek bonds as collateral. That caused the euro to tumble.

Greece's aid deadline with the European Union, the ECB and International Monetary Fund "troika" expires on Feb. 28.

"The Greek situation will remain a key factor at least until the Feb. 28 aid deadline. The development is likely to peak next week, giving time for at least one more round of upsets for the market," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.

"For now we can turn away from Greece and focus on U.S. jobs data, which may provide an opportunity to slow the unwinding of dollar long positions that has been taking place," Ishikawa said.

Another solid U.S. payroll reading, coupled with a possible rebound in wage growth, may revive recently-flagging views that the Federal Reserve might consider raising interest rates as early as mid-year and favour the dollar.

The dollar index moved sideways at 93.587 after shedding nearly 1 percent overnight. The greenback was little changed at 117.48 yen.

Its commodities-linked Canadian counterpart remained under support after marching higher overnight as volatile crude oil rebounded from the previous session's plunge.

The Canadian dollar was steady at C$1.2450 from Thursday's low of C$1.2585.

The Australian dollar, also aided by the crude oil bounce, rose 0.5 per cent to US$0.7836 after a statement from the Reserve Bank of Australia did not sound as dovish as some had expected.