AFP: CURRENCIES: Dollar Steadies; Euro Pressed Amid Greek Aid Talks
By William L. Watts
The U.S. dollar steadied Wednesday, regaining ground versus the euro as Greek bond yields jumped despite the start of talks expected to result in the activation of a joint standby aid plan.
The euro (CUR_EURUSD) fell to $1.3377, down from $1.3441 in North American trade late Tuesday.
The yield premium demanded by investors to hold Greek government bonds soared to more than five percentage points at the 10-year level as the Greek 10-year bond yield move above 8% for the first time since before the launch of the euro in 1999.
Greek officials began talks with representatives of the European Union and the International Monetary Fund on Wednesday in Athens.
The discussions are widely viewed as a step toward activation of the 45 billion euro ($60.6 billion) joint aid plan agreed last month.
"The euro is likely to trade with a downward bias until the debt talks are over," said Jessica Hoversen, currency strategist at MF Global in Chicago.
But "any 'solution' to the Greek deficit problems they might arrive at will, at most, provide short-term relief ... and modicum of recovery for the [euro]," Uwe Parpart, chief Asia strategist at Cantor Fitzgerald, said in a note to clients.
"In the longer-run, only massive efforts to coordinate eurogroup fiscal policy and to attain comparable levels of economic development will save the eurogroup and the [euro] from disintegrating," he said.
The dollar index (DXY), which measures the U.S. currency against a basket of six others, traded at 81.306, up from 81.039 in North American trading late Tuesday and erasing a loss posted during Asian trading hours.
The British pound (CUR_GBPUSD) was up 0.1% versus the U.S. dollar at $1.5389. The euro fell 0.5% versus the pound to trade at 86.88 pence.
Sterling got a lift from a much larger-than-expected drop in the number of persons claiming jobless benefits in March, strategists said, although this was tempered by a rise in the unemployment rate in the three months ending in February.
The dollar was up slightly versus the Japanese currency to fetch 93.19 yen, up from 93.13 Japanese yen (CUR_USDYEN) late Tuesday.
The U.S. dollar lost another 0.2% versus the Canadian dollar (C_CAD) to trade at 99.63 Canadian cents, a day after the loonie soared through parity. The surge was triggered when the country's central bank on Tuesday signaled its willingness to soon begin tightening monetary policy.
