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The euro rose against the majority its most-traded counterparts after European leaders reassured investors a Greek default on its debts can be avoided, easing concern about a spreading regional credit crisis.
The common currency erased its decline versus the yen and dollar, as Luxembourg’s Jean-Claude Juncker said Italy was not in danger amid the euro area’s debt crisis. The Swiss franc remained higher against all its most-traded counterparts as Juncker said Greek Prime Minister George Papandreou had assured him the government would do everything ensure financial aid before the Greek parliament takes no confidence vote in his government tomorrow.
“Juncker had some comments about Italy not being in danger and these are overall soothing comments,” said Paresh Upadhyaya, head of Americas G-10 currency strategy at Bank of America Corp. in New York. “In the near-term, we’re going to be focusing on tomorrow’s no confidence vote in Greece.”
Greece needs parliamentary approval of a 78 billion-euro package ($111.6 billion) of budget cuts to ensure the payment of a fifth loan under last year’s 110 billion-euro bailout.
The new Greek finance minister, Evangelos Venizelos, who was named in Papandreou’s cabinet overhaul three days ago, came to Luxembourg with a “strong commitment” to the planned cuts that provoked street protests last week.
“We think right now, given the political shuffling Papandreou initiated with the appointment of a key rival as finance minister, it’s all but certain he will survive the vote tomorrow, said Bank of America’s Upadhyaya.
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