FOREX-Euro slides as market awaits word on Greek bailout deal

* Greece far-right leader says cannot back bailout deal
* Euro zone ministers seek more commitments from Greece
* Aussie falls, dovish RBA statement weighs
* Speculators cut U.S. dollar bets in latest week

By Julie Haviv
NEW YORK, Feb 10 (Reuters) - The euro fell
on Friday as Greece's far-right party
leader refused to back a bailout agreement, raising concerns,
once again, that Greece could face a disorderly default on its
debt.
The trajectory of the euro over the next week will
hinge on news about Greece and whether it succeeds in getting
its second bailout, with Wednesday's Eurogroup meeting seen as
crucial.
The market's pessimistic tone on Friday starkly
contrasted with the previous session in which optimism over a
Greek deal lifted the euro to an eight-week high against the
dollar. Sharp daily swings in sentiment have largely defined the
currency market in recent weeks, causing the euro to trade
within a narrow range as the latest headlines dictated
direction.
Political parties in Athens on Thursday struck a
long-awaited deal on harsh austerity steps necessary for a
second rescue package and a debt swap deal with Greece's private
bondholders is thought to be close.
But George Karatzaferis, head of the LAOS party, said on
Friday he cannot vote for the loan agreement. Reports of
resignations by government ministers in protest against the
bailout agreement added to concerns.
Karatzaferis's comments caused the euro to extend earlier
losses after euro zone finance ministers sought further measures
from Greece before signing off on the 130 billion euro bailout
package.
Nevertheless, some strategists believe a Greece deal
will ultimately be reached, which should pave the way for euro
gains.
"The (performance of) the euro will depend on what
happens in Greece next week," said Charles St. Arnaud,
fx strategist at Nomura Securities in New York.
"Our base case is that the new wave of austerity will
be approved and that we will get an agreement regarding the PSI
(private sector involvement)," he said. "Based on that we could
see EUR/USD higher by the end of the week."
In New York, the euro was last down 0.9 percent at
$1.3164, well below the two-month high on Thursday.
Eurogroup Chairman Jean-Claude Juncker said a further 325
million euros of spending cuts needed to be found and, with
Greek elections looming, political assurances were needed that
the plan would be implemented.
The Eurogroup includes the finance ministers of the
countries in the euro zone.
"Although the Greek saga continues and risks of default
remain, the market is relatively confident that a deal will be
made as EUR/USD continues to hover near its year-to-date highs,"
said Boris Schlossberg, director of currency research at GFT
Forex in Jersey City, New Jersey.
The situation, however, remains politically charged and if
the Greek parliament balks at approving the austerity measures
imposed by its lenders, the euro could move sharply lower, he
said.
Greece must do whatever it takes to approve a bailout deal
and avoid catastrophe, Greek Prime Minister Lucas Papademos
said, adding that cabinet members who disagree have no place in
the government.
"Time is clearly running out for any further negotiating
maneuvers as next week appears to be the hard target deadline
for a Greek bailout deal," Schlossberg said.
Currency speculators cut their bets in favor of the U.S.
dollar in the latest week, according to data from the Commodity
Futures Trading Commission released on Friday.

THE AUSSIE SLIDES
The Australian dollar was pressured by euro zone concerns as
well as a dovish quarterly statement from the Reserve Bank of
Australia and data showing a slump in Chinese imports.

The Aussie was last down 1.1 percent to $1.0662,
after falling to its lowest in more than a week and well below a
six-month high reached this week.
Against the yen, the euro was down around 1 percent on the
day at 102.18 yen, off a two-month high hit on
Thursday.
The dollar rose to its highest against the yen in two
weeks before surrendering gains. It was last at 77.58 yen, down
0.1 percent.
Still, Japanese Finance Minister Jun Azumi said the exchange
rate remained out of sync with economic reality and repeated he
was ready to counter excessive speculation.
While Greece will undoubtedly dominate news next week,
economic data should also garner attention.
Germany's economy probably contracted more than first
estimated in the fourth quarter, Reuters polls of economists
indicated, although activity is already likely recovering ahead
of the publication of official data next week.
The GDP for the euro area will also emerge next week.
In the U.S., retail sales data, the consumer price index and
minutes from the Federal Reserve's last monetary policy meeting
are slated for release.