* Euro's gains capped before finance ministers' meeting
* Greece approves budget, concerns about aid remain
* U.S. fiscal worries hits appetite for risky assets
By Anooja Debnath
LONDON, Nov 12 The euro held steady just above a
recent two-month low on Monday after Greece's ruling coalition
secured enough votes in parliament to approve a tough 2013
Gains in the single currency were limited before a meeting
of euro zone finance ministers on Monday, which was not expected
to agree the release of fresh bailout funds.
Pressure to strike a deal on Greece is growing as Athens has
to redeem 5 billion euros worth of treasury bills on Nov. 16 and
had been counting on cash from the next aid tranche.
The euro was flat on the day at $1.2710, close to the
two-month low of $1.2690 reached on Friday, on the EBS trading
platform. Traders cited stop loss sell orders below $1.2680 with
investors looking to sell the euro above $1.2720.
This was likely to see the euro trade in a range.
German Finance Minister Wolfgang Schaeuble told a German
newspaper on Sunday that the troika of international lenders to
Athens was unlikely to deliver its full report in time for the
euro zone finance ministers' meeting.
"The key issue will be what comes out of the Eurogroup
meeting. If the tranche is released it is positive for risk and
we should see a reasonable bounce in the euro, given the
pessimism that's been built into the markets about the euro
area," said Raghav Subbarao, FX strategist at Barclays.
While the passage of the budget removed some of the
near-term uncertainty surrounding Greece, the euro is likely to
remain under pressure until an agreement on how to make Greek's
debt more sustainable is reached.
Richard Hastings, macro strategist at Global Hunter
Securities, said that while the euro could come under pressure
as investors hedged some of the risks associated with the Nov.
16 Greece funding deadline, he expected a deal.
"We should emphasise that when it comes to distressed
finance, deadlines are not as hard as they seem, and deals are
surprisingly spontaneous at any moment," he added.
Any euro bounce, though, could be short-lived as recent
economic data has shown the crisis which started in the euro
zone periphery is spreading to its core, with German growth
likely to slow in coming quarters and France likely to slip into
U.S. FISCAL WORRIES
Concerns about the so-called U.S. fiscal cliff has seen
safe-haven flows into the dollar and kept it near a two-month
high against a basket of currencies.
Demand for riskier currencies has been sluggish as investors
fret about the possible impact of some $600 billion in expiring
tax cuts and spending reductions due to take effect in January.
Currency speculators favoured the U.S. dollar in the latest
week for the first time since early September, according to data
from the Commodity Futures Trading Commission released on
The dollar bought 79.44 yen, flat from Friday when it
fell as low as 79.07 yen, its weakest in nearly three weeks.
Markets shrugged off a 0.9 percent July-September
quarter-on-quarter contraction in Japanese economic output, in
line with forecasts. This was the first negative reading in
three quarters but it added to fears that slowing global growth
is pushing the economy into recession.
Morgan Stanley held to its medium-term view that the yen
would weaken and said it expected dollar/yen to resume its