Euro rises from 16-month low but respite seen temporary

The euro rose from a 16-month low against the dollar on Monday as participants pared short positions but remained overwhelmingly bearish amid fears about a Greek default and as sovereign debt concerns weigh.

With euro net short positions at their largest ever, according to recent data, the currency was susceptible to short-covering. But gains were contained as German Chancellor Angela Merkel reignited fears of a Greek default.

Merkel said it would not be possible to pay out the next aid tranche to Greece without rapid progress on its second rescue package, including the voluntary restructuring of Greek debt held by its private creditors.

Merkel's comments added to an already cautious climate as the euro zone grapples with a recession and as two of the largest economies test the market's demand for their debt later this week.

Read Full Article from Reuters

- Posted: 2012-01-09 14:09:23

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