TOKYO, May 28, 2012 (AFP) – The euro firmed against the dollar and yen in a “relief rally” in Asia Monday as opinion polls suggested Greece’s conservative pro-austerity party was in the lead prior to next month’s election.
The single currency, which briefly fell below $1.25 last week to its lowest level in nearly two years, bought $1.2596 and 100.01 yen in Tokyo afternoon trade, up from $1.2515 and 99.66 yen in New York late Friday.
The dollar eased to 79.39 yen from 79.64 yen in New York.
“We start the week with a relief rally, triggered by positive opinion polls in Greece,” National Australia Bank said in a note.
“It’s a public holiday in the US and some EU countries, which may allow for some respite from market negativity for the day.”
A series of opinion polls in Greece on Sunday showed that the New Democracy party is on course to secure the most seats in the June 17 vote, although without an outright majority.
The new polls predict a New Democracy victory with as much as 25.8 percent of the vote, a result that would still require it to reach out to other parties to form a viable government.
National Australia Bank added that “market opinion is likely to vacillate” ahead of the polls, aimed at ending a political stalemate in the debt-riddled nation amid concerns it will bounce out of the eurozone.
“Any negative news will likely bring the (euro/yen) pair back down,” said a dealer at a major Japanese trust bank.
Greece has committed itself to a reform programme in return for hundreds of billions of euros in bailout funds from the EU and the International Monetary Fund to prevent a disorderly default.
Many of the reforms promised in exchange are currently in limbo however after the radical Syriza party, which is opposed to the bailout terms, polled strongly in the May 6 election.
Broader eurozone worries continued to weigh after troubled Spanish lender Bankia asked the government for 19 billion euros ($24 billion) in what would be the largest bank bailout in the country’s history.
Market players this week will keep a close eye on headlines from Europe, as well as Friday’s US non-farm payrolls data, the trust bank dealer told Dow Jones Newswires.
The dollar was mostly lower against other Asian currencies on Monday.
The greenback dipped to 1,174.80 South Korean won from 1,184.20 won on Friday, to 43.56 Philippine pesos from 43.87 pesos, to 31.64 Thai baht from 31.69 baht, to Tw$29.58 from Tw$29.63, and to Sg$1.2746 from Sg$1.2770.
But the dollar firmed to 9,451.00 Indonesian rupiah from 9,360.00 rupiah.
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