Greek lawmakers expected to provide final approval of austerity plan
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The dollar fell slightly against the euro, which briefly topped $1.45, as lackluster European economic data tempered some of the enthusiasm surrounding Greece’s expected approval of legislation implementing austerity measures.
The euro EURUSD +0.58% rose to $1.4472 in recent action, up from $1.4431 in late North American trading on Wednesday. The single currency rose as high as $1.4521 in Asian trade, its highest level since June 10.
The dollar index DXY -0.27% , which measures the performance of the U.S. unit against a basket of six currencies, slipped to 74.517 from 74.682 late Wednesday. See real-time currency quotes and tools.
The euro was boosted Wednesday after Greek lawmakers voted 155-138 to approve a 78 billion-euro ($112.2 billion) package of additional austerity measures and asset sales. Analysts also expect Greek lawmakers to approve later Thursday the steps needed to implement the measures. Read about final austerity vote.
Approval would clear the way for release of a delayed installment of aid from the European Union and International Monetary Fund seen as crucial to averting a default by Greece as early as next month.
“With the fifth EU/IMF Greek disbursement now all but done, a significant amount of tail risk has been taken out the market,” said currency strategist sat Westpac. “But what happens when we start to discuss the sixth? Despite an awful lot of Greek blood, sweat and tear gas, budget holes will soon start to appear.”
Also supporting the euro are expectations that the European Central Bank will raise rates in July, making the region’s debt yields and currency more attractive relative to other options.
“The euro may continue to rally into next week’s ECB meeting as it did in April, May and June,” the Westpac analysts added, in a research note.
But the euro’s rally Thursday ran out of steam after a round of profit taking and weak retail sales data from Germany and France, said Boris Schlossberg, director of currency research at GFT, in emailed comments.
German retail sales fell 2.8% in May after a 0.6% rise in April. Economists had forecast a 0.5% rise. French consumer spending fell 0.8% in May.
Month-end, quarter-end
For June, the euro has eked out a 0.3% gain, and is up 2.1% in the quarter thanks to ECB rate hikes and expectations that rates will rise further.
The dollar index has lost 0.2% this month and is down 1.8% for the quarter.
Trading in other currencies was largely driven by investors making adjustments to their portfolios at the end of the month and quarter.
