* Euro gains on prospects of deal on Greece funding
* Disagreements between IMF and euro zone limit euro rise
* Better signs on U.S. fiscal cliff lift riskier currencies
* BoJ meeting eyed for yen direction
By Julie Haviv
NEW YORK, Nov 19 The euro gained against the
dollar on Monday, buoyed by appetite for risk on optimism that
Greece will receive more funding and signs of progress on
resolving a looming U.S. fiscal crisis.
The common currency shared by the 17 euro zone countries,
however, is down 1.4 percent so far in November and analysts
said concerns about differences of opinion between euro zone
officials and the International Monetary Fund may limit the
European officials are expected to discuss a two-year
funding plan for Athens at a meeting on Tuesday, which would
postpone any longer-term solution until after a September 2013
German general election.
"Hopes that maybe we will get better news out of Greece is
providing a little bit of support to the euro," Daragh Maher,
currency strategist at HSBC. "I am not supremely confident (of a
resolution being reached on Tuesday). The history of this
process has been one of delays."
But he said investors would not sell the euro aggressively
because the issue was still likely to be resolved at some point.
He added that a close above the 200-day moving average would
increase investor confidence in holding euros.
The euro was last up 0.3 percent at $1.2772, having
earlier hit a high of $1.2789. Traders said it may struggle to
vault last week's high of $1.2801.
European Central Bank policymaker Joerg Asmussen said on
Sunday the euro zone should agree on two years of funding for
Greece, while German Finance Minister Wolfgang Schaeuble said he
was banking on a deal on Tuesday.
But they may encounter opposition from the IMF, which wants
a permanent solution to Greece's debt problems.
Analysts at Morgan Stanley recommended buying the euro at
$1.2730, with a target of $1.33 and a stop at $1.2650.
They expected progress towards a compromise on the next
payment of funds for Greece, which should support the euro, and
that Spain would apply for a bailout, paving the way for the
European Central Bank to buy its bonds.
FISCAL CLIFF CLIFFHANGER
Risk appetite improved, with world stock markets recovering
some of their sharp losses last week, fueled by comments from
U.S. lawmakers who indicated that compromises are possible in
negotiations to avert $600 billion in tax increases and spending
cuts due to start in January.
Many believe this "fiscal cliff" threatens to send the U.S.
economy back into recession, but the dollar would benefit in
this scenario due to risk aversion.
The dollar should weaken against the Canadian dollar and
British pound into year-end, according to Camilla Sutton, chief
currency strategist at Scotiabank in Toronto.
"The focus post-US election has been on the fiscal cliff,
which we recognize as an important risk, h owever w e b elieve that
ma rkets have moved too far into tunnel vision and are neglecting
other important dollar drivers," she said.
"The most important of which is the Fed meeting on Dec. 12,
where we expect QE3 to be expanded to include Treasuries (at the
conclusion of Operation Twist)."
The Fed's Operation Twist entails selling short-term
securities in exchange for long-term bonds.
Against the yen, the dollar last traded flat at 81.24 yen
, according to Reuters data.
Investors have been selling the yen after elections were
called for Dec. 16 and the leader of the opposition Liberal
Democratic Party called on the BOJ to print "unlimited yen" and
set rates at zero or below.
But investors were wary of pushing it much lower before a
BOJ policy announcement on Tuesday. most analysts expect it will
not announce additional monetary easing.
"It's most unlikely the BOJ will make major changes this
meeting, but the trend (for the yen) seems to be changing," said
Audrey Childe-Freeman, head of foreign exchange strategy at BMO
Currencies showed little reaction to U.S. housing data
showing home re-sales unexpectedly rose in October while
homebuilder sentiment rose to its highest in more than six