* Aussie recovers ground after RBA hikes to 4.25%
* Euro slides as reports reignite Greek debt concerns
* Yen climbs off 7-month low vs dollar, surges on crosses
* GBP slips as election call tension mounts
By Charlotte Cooper
TOKYO, April 6 (Reuters) - The Australian dollar gained after
the Reserve Bank of Australia (RBA) raised its cash rate on
Tuesday although with many in the market already holding the
currency, the hike wasn't enough to propel it up substantially.
The euro tumbled as bearish sentiment reignited, aided by
reports on Greece's fiscal problems, while sterling eased ahead
of an expected election announcement in Britain and the yen
seized back lost ground as short yen positions looked stretched.
The RBA put up its cash rate by 25 basis points to 4.25
percent, its fifth hike since October, said it was appropriate
that rates move toward normal and that this was a step in that
process. The market had largely expected an increase although
with some hesitation that it might delay. []
The Aussie climbed as far as $0.9230 <AUD=D4>, up about 0.2
percent on the day after the decision, having fallen ahead of it
on profit-taking. May interbank futures <0#YIB> implied some in
the market thought a further rate rise in May was possible.
"The statement was a little more more hawkish than expected,"
said Robert Ryan, FX strategist at BNP Paribas in Singapore.
He said there was a chance the Aussie would clear resistance
at current levels.
"But $0.9250 is going to be harder going," he said.
The Australian dollar has been trapped below $0.9400 since
November, unable to push on with an uptrend from last year
despite having higher rates than other developed economies. The
$0.9250 area is a high in March it has not managed to match.
Currency speculators remained very long of the Aussie in the
week ending March 30, according to data from the Commodity
Futures Trading Commission (CFTC) [].
Aussie net long positions stood at 69,340, down slightly from
74,339 the week before, but neck-and-neck with a net 70,296 long
positions for another commodity currency, the Canadian dollar.
EURO LOSES FOOTING
The euro's downtrend has kicked back in this week after a
brief rebound and as U.S. services and jobs data has supported
optimism about U.S. economic recovery and higher U.S. rates. It
fell 0.4 percent to $1.3432 <EUR=> and 1 percent to 126.05 yen.
Dealers said media reports that Greece wanted to amend its
deal on financial aid reached at last month's EU summit and that
Greek banks were being hit by redemptions had hurt the euro.
The report by Market News International cited government
sources as saying conditions suggested by the IMF were tough and
could cause social problems. []
"This is negative for the euro because it suggests we have
more messy discussions and disagreements to come," Ryan said.
Britain's Daily Telegraph said wealthy Greeks and firms were
looking to move money offshore. []
U.S. and European banks were early sellers of euro/dollar,
with loss-cutting sell orders expected at $1.3380, although there
was also talk of bids from U.S. names between $1.3400-3450,
traders said.
Now its correction from late March appears to be over, the
euro's target was the March low of $1.3267, they said. However
CFTC data also shows net euro shorts also hit a record high
85,326 contracts in the week of March 30.
The yen struck back after falling to a seven-month low of
94.78 yen per dollar on Monday <JPY=>, recovering to 94.00 yen
and pushing the Australian dollar down 0.3 percent to 86.66 yen
<AUDJPY=R>.
The CFTC data shows that net positions in the yen flipped
from long to short in the week of March 30 and traders were
questioning how far it could slide just now, with short positions
now stretched too far too fast. []
They also expected any dollar rise to 95.00 yen would be high
enough for Japanese exporters to want to convert dollar earnings,
although exporters were already selling before that level.
One trader at a trust bank said he was watching how
short-term players would behave now there was speculation that
easing China-U.S. tensions improved the chance of a Chinese
policy shift to allow the yuan to rise gradually.
U.S. Treasury Secretary Timothy Geithner said on Saturday he
would delay an April 15 report on whether China manipulates its
currency. Chinese President Hu Jintao is scheduled to visit
Washington next week for a nuclear security summit.
[]
Some market players believe the yen would get a boost, though
temporarily, if China allows the yuan to rise.
Sterling fell 0.4 percent to $1.5234 <GBP=D4> but was holding
steady against the euro at 88.14 pence <EURGBP=D4>.
A source from Britain's ruling Labour party said Prime
Minister Gordon Brown was set to meet Queen Elizabeth on Tuesday
to request a dissolution of parliament and start the ball rolling
for a May 6 election. []
The opposition Conservatives lead Labour in the opinion polls
but the gap is close and sterling has been under pressure in
recent weeks on concerns there could be no clear winner.
The Canadian dollar <CAD=D4> held close to parity with the
U.S. dollar, looking set for a test soon of levels not seen since
July 2008.
(Additional reporting by Anirban Nag in Sydney, Satomi Noguchi,
Kaori Kaneko and Aiko Hayashi in Tokyo; Editing by Edwina Gibbs)
