BUSINESS
06/17/2012 06:08 pm ET | Updated Aug 17, 2012

Greek Elections 2012: Euro Reaches One-Month High After Vote

* Euro makes gains on dollar and yen on vote relief

* Greek results suggest pro-euro parties holding slim majority

* Risk assets looking bid, with Aussie lifting to 5-week top

By Wayne Cole

SYDNEY, June 18 (Reuters) - The euro hit a one-month high against the U.S. dollar on Monday after Greek election projections showed parties committed to staying in the single currency were on course to secure a slim parliamentary majority.

The euro rose to $1.2747 in early trade, from around $1.2655 late in New York on Friday. Volumes were light with traders cautious on how the result would pan out.

"There's still some uncertainty about what form the government will take and the market's waiting for clarity on that," said Peter Dragicevich, an FX economist at Commonwealth Bank of Australia.

"If equities open up the euro should be supported around these levels," he added. "But the vote doesn't sort out Spain's banking problems or the lack of growth in the region, so we don't see the euro going much higher."

With 80 percent of the votes counted, New Democracy had 30.1 percent of the vote to the radical leftist SYRIZA's 26.6 percent, with PASOK on 12.5 percent.

Because of a 50-seat bonus given to the party which comes first, that result would give New Democracy and PASOK 163 seats in the 300-seat parliament, in an alliance broadly committed to the 130 billion euros ($164 billion) bailout.

Technically the break of $1.2670 resistance was supportive, with the next barrier at $1.2745. Against the yen, the euro rose to 100.59 yen.

The dollar inched up to around 78.90 yen, compared with 78.65 yen in late trading in New York on Friday.

Currencies considered to be leveraged to global growth enjoyed a relief rally, with the Australian and New Zealand dollars up at their highest in more than a month. The Aussie firmed to $1.0124, from around $1.0048 late on Friday.

CBA's Dragicevich noted the U.S. currency was restrained by speculation the Federal Reserve was nearer to another round of quantitative easing.

"There's a chance the Fed could adopt more of an easing bias at its policy meeting on Wednesday and that should cap the dollar for now," he added.

Most other asset markets were yet to open for trading, after shares, commodities and bond markets had climbed on Friday.

Australian share price index futures indicated a higher open to the S&P/ASX 200 index.

The initial Greek vote results drew expressions of relief from world leaders. German Finance Minister Wolfgang Schaeuble said the results, if confirmed, were a commitment to reform, while the White House hoped for the speedy formation of a new government that would remain in the euro zone.

"The response suggests investors are anticipating the formation of a pro-bailout government," said analysts at CitiFX in Singapore. "This looks to fit in line with the most benign scenario for the election."

"Still, we are skeptical that this marks the beginning of a new uptrend," they added. "For sustained gains in EUR in the days ahead, further 'encouraging' headlines will likely be needed from this week's G20 meeting and the later EU summit."

RELATED ON HUFFPOST: