* Euro steadies after slip on French rating cut
* Euro zone finance ministers meet to discuss Greek aid
* Yen near seven-month low after BOJ holds policy
By Philip Baillie
LONDON, Nov 20 The euro steadied against the
dollar on Tuesday as cautious optimism that euro zone ministers
would release funds for Greece offset losses after a cut to
France's credit rating.
Finance ministers meet later to discuss unlocking delayed
aid payments to Greece, a day after Athens passed laws to
enforce budget targets.
The single currency was last close to flat on the day
at $1.2810, holding above a Nov. 13 low of $1.2706.
Signs that Greece seemed to be on track to receive the
funding supported demand for the euro, which clawed back earlier
losses after ratings firm Moody's stripped France of its
triple-A status late on Monday.
Some analysts said the cut did not come as a surprise after
Standard & Poor's downgraded France in January, and the finance
ministers meeting could have a bigger impact on the euro if
policymakers fail to meet market expectations.
"The main driver in terms of the news flow was the downgrade
of France overnight but the knee-jerk reaction we saw overnight
was very short lived," said Michael Sneyd, FX strategist at BNP
"That tells us the downgrade was not a surprise...The focus
today is the Eurogroup meeting and there we are looking for some
reasonable progress to be made for Greece's next aid tranche."
He said he was looking for progress on Greece to help the
euro consolidate above $1.28, adding it could reach $1.30 if
U.S. policymakers agree a solution to avert $600 billion of tax
hikes and spending cuts, dubbed the "fiscal cliff".
Strategists said failure to reach an agreement on loans to
Greece could see the euro give up its gains of recent days and
fall back below $1.28, targeting the Nov. 13 low of $1.2661.
"If this does drag on beyond today there's scope for it to
cause some disappointment for the euro," said Jane Foley, senior
currency strategist at Rabobank.
Some investors were wary after Finland's finance minister,
Jutta Urpilainen, said she was unsure Greece's next loan tranche
would be approved at the meeting.
YEN WEAKNESS PERSISTS
The dollar rose 0.1 percent versus the yen to 81.50,
nearing a seven-month high of 81.59 yen hit on Monday amid
mounting political calls for more aggressive monetary expansion.
The yen looked vulnerable even after the Bank of Japan held
off from additional monetary stimulus at its latest policy
meeting, as expected, after having eased policy in September and
The yen has slid over the past week on market expectations
that a likely new Japanese government after a Dec. 16 election
would push the BOJ toward more forceful monetary stimulus.
Shinzo Abe, the leader Japan's opposition Liberal Democratic
Party, has called for the BOJ to take bolder action, including
"unlimited easing", pushing interest rates to zero or below and
directly underwriting bonds issued to fund public works
Some analysts said the dollar may have more room to rise
against the Japanese currency in the near term and could break
above 82 yen, a level last seen in April.
The euro also made gains against the yen, hitting
a four-week high of 104.50 yen.