Euro near five week high against dollar on Greek hopes

The euro managed a five-week high versus a broadly weak dollar yesterday on speculation of some progress made in Greek debt negotiations, as reported by Reuters.

Progress rumours were paired with the US Federal Reserve indicating that interest rates will remain at ultra low levels until at least 2014. Between them they caused the euro to take a turn for the better. Back in Athens, traders said that the euro was boosted as a result of media reports emerging on Greece's private creditors being willing to reduce their "final offer" of four percent interest rates on new Greek bonds in an attempt to reach a deal and avert a messy default.

The Greek media reported on the offer but strangely didn't quote any sources. Analysts said that the euro is still vulnerable to negative headlines related to the talks and such an event could prompt investors into buying back safe haven US dollars or yen.

The euro hit $1.3175, which was its highest level since 21 Dec, and was last reported to be trading up 0.3 per cent at $1.3145. The single currency had rallied from $1.2980 before the Federal Reserve's statement on Wednesday,

Against the yen, the euro hit its highest rate of 102.168, which was well above the 97.04 yen, an eleven-year-low touched on 16 January. George Saravelos, a G10 FX strategist for Deutsche Bank, explained that stories have been published in a few Greek newspapers that suggest private creditors making a lower offer, which has aided the euro. Saravelos added that most of the focus is on that fact that that Fed has been dovish.