* Speculation grows Greece may receive debt aid soon
* EU officials reach deal on Greek loan terms-source
* Fitch cuts Greece 2 notches, says outlook negative
(Adds detail, comment, updates prices)
By Wanfeng Zhou
NEW YORK, April 9 (Reuters) - The euro rose against the
dollar on Friday on speculation Greece may get aid to tackle
its debt crisis.
Euro zone deputy finance ministers and senior central
bankers have reached an agreement on the terms of possible
emergency loans for Greece, a European Union source said on
Friday. For more, see []
Talk of a lifeline helped traders shrug off Fitch's cut to
its Greece credit rating by two notches. The agency signaled
further downgrades were possible, citing growing fiscal
challenges in the debt-ridden country. []
Still, doubts about bailout terms and euro zone economic
growth were expected to keep the single currency under
pressure.
"The overall bias has been positive in terms of some form
of bailout being agreed upon and I think that's probably what's
been helping the euro at this point," said Vassili Serebriakov,
currency strategist at Wells Fargo in New York. "We've seen
some easing of concerns over Greece...by no means have we seen
the end of the story."
In midday trading, the euro was up 0.8 percent at $1.3468
<EUR=>, after hitting a session high of $1.3491, according to
Reuters data. It also was up 0.6 percent at 125.58 yen
<EURJPY=>.
Sentiment on the euro remained negative despite Friday's
gains. The single currency hit a two-week low around $1.3278 on
Thursday and is still down almost 6 percent versus the dollar
so far this year.
Medium term negatives include a lack of clarity on the
Greek bailout plan and expectations euro zone economic data
will continue to be sluggish, said Aroop Chatterjee at Barclays
Capital.
"The market had gotten quite negative on the euro and what
we're seeing is a bit of a squeeze of some of those euro
shorts," said Chatterjee, a currency strategist in New York.
However, the euro drew support after European Central Bank
President Jean-Claude Trichet on Thursday said a Greek default
was unlikely. He reiterated that view in an interview on
Friday. [].
Earlier, EU President Herman Van Rompuy was quoted saying
the EU stood ready to help if asked and a Eurogroup meeting in
mid-April would find a solution for any remaining Greek aid
problems. See []
Traders also cited an influential think-tank report saying
EU officials have reached an agreement on funding a backstop
deal for Greece for the euro's move higher.[]
YUAN SPECULATION
Against the yen, the dollar was down 0.2 percent at 93.22
yen <JPY=>.
The yen rallied on Thursday after the New York Times
reported on Thursday China is very close to announcing a shift
in its currency policy, including a "small but immediate"
revaluation of the yuan [].
The yen tends to benefit from a stronger yuan as it is used
as a proxy for less flexible Asian currencies, though some
analysts cautioned that link has weakened in recent years.
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For Insider on yuan revaluation:
http://link.reuters.com/xut96j For graphic on Greek and euro
zone economy
http://graphics.thomsonreuters.com/10/04/GR_ECON0410.gif
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Analysts at Brown Brothers Harriman said media claims of an
imminent change in the Chinese currency regime are likely to
"prove exaggerated."
"Next week China's President Hu (Jintao) will visit the
U.S. If China wants to avoid the appearance that it is
capitulating to U.S. pressure, it does not seem to make sense
to place high hopes on a move then."
The Canadian dollar fell as low as C$1.0084 <CAD=D3> per
U.S. dollar after data showed Canada's economy added a
lower-than-expected 17,900 jobs in March []. The
greenback was last at C$1.0052, up 0.3 percent.
(Editing by Andrew Hay)
