By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar regained some ground lost to the euro Tuesday, as doubts about the European currency lingered ahead of Greece’s eagerly awaited austerity vote later this week.
The euro EURUSD -0.20% was buying $1.4273, compared with $1.4275 in late North American trading on Monday. See real-time currency quotes and tools.
Earlier Tuesday, the euro rose as high as $1.4320, but those gains unraveled.
“Clouds continue to gather for the euro, and it is not only the sovereign-risk crisis which is damaging sentiment,” said strategists at UBS Investment Research.
The U.S. Federal Reserve’s “clear message on near-term monetary policy has probably hit investors who were still positioned” for a third round of quantitative easing, they said. Many investors now believe so-called QE3 is no longer as likely as some had thought.
Moreover, falling commodity prices should weigh on the euro, “as current correlations stand.” Prices of dollar-denominated commodities such as oil typically move inversely to the greenback. Read more on crude-oil futures.
Greece’s parliament will vote this week on an austerity plan needed to secure a €12 billion ($17 billion) round of bailout funds, and keep it on track with the European Union and the International Monetary Fund. Read more on Greece.
“In any event, even if the euro-zone manages to clear current hurdles, it is highly unlikely that Greece will hit the Troika’s targets and the same process will repeat itself in the coming months,” the UBS strategists said in a note to clients. The Troika refers to the EU, the European Central Bank and the IMF.
Click to Play
Is gold entering a bear market?
As gold falls to a five-week low, Mark Hulbert explains why he thinks the precious metal has not entered a bear-market.
The dollar index DXY +0.11% , which measures the performance of the U.S. unit against a basket of six other currencies, rose to 75.351 from 75.338 Monday.
The Australian dollar AUDUSD +0.15% rose to $1.0447 from $1.0436 Monday.
The British pound GBPUSD -0.43% slipped to $1.5956 from $1.5979.
Against the yen, the dollar USDJPY +0.02% bought ¥80.75, compared with ¥80.86 late Monday.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
