FRANKFURT (MarketWatch) — The U.S. dollar slipped versus most major rivals in quiet trade Friday, with safe-haven flows drying up as investor risk aversion faded and the euro recovered amid a rally by French and other non-German core and peripheral government bonds.
The ICE dollar index DXY -0.22% , which measures the U.S. unit against a basket of major rivals, fell to 82.042 from 82.342 — its highest level since 2010 — in North American trade late Thursday.
The euro EURUSD +0.37% , which tumbled to a 22-month low in Thursday’s action, traded at $1.2581, up from $1.2539.
Strategists said expectations the European Central Bank could eventually move to provide additional stimulus or take other steps to stave off a panic inspired by the uncertain implications of a potential Greek exit from the euro zone helped steady risk appetite.
But they warned that any actions would likely have a limited impact.
“There’s little doubt that the market could prove very sensitive to any remedial action from policy makers, whether it’s just euro-zone officials or involves other countries as well. But while this might help support the euro—and risk assets—to some extent, our feeling is that the fundamentals are sufficiently poor for the single currency right now that any spikes will not necessarily prove long-lasting,” said Steven Barrow, currency strategist at Standard Bank, in a note.
Traders noted an ongoing rally by French and other non-German core bonds. The yield on the 10-year French bond FR:10YR_FRA -1.62% fell 0.04 percentage point to 2.52, while the 10-year Dutch yield NL:10YR_NET -0.12% fell 0.02 percentage point to 1.82%.
“Need for returns amid widespread uncertainty over Greece’s future in the single currency have caused non-domestic European real money clients to invest in higher yielding European assets,” wrote strategists at Lloyds TSB.
German yields have fallen to record lows.
The British pound GBPUSD +0.12% changed hands at $1.5678, up slightly from $1.5664.
The dollar USDJPY -0.11% bought 79.53 Japanese yen, down from ÂĄ79.63 on Thursday.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
