MW: Dollar up, euro dips as Greece dents risk appetite
By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The dollar moved higher Monday, while the euro saw modest pressure as Greece struggled against the clock to cut a deal with its international creditors for a second bailout seen as necessary to averting a messy default.
The dollar index DXY +0.61% , which measures the greenback against a basket of six currencies, stood lately at 79.349, up from 78.969 in late North American trading on Friday.
The euro EURUSD -0.50% trimmed an earlier loss versus the U.S. dollar but remained lower at $1.3075, down from $1.3147 late Friday.
Greek party leaders have resisted calls by international creditors for further austerity measures, while European leaders have upped pressure on Athens to come to an agreement. Without a deal freeing up a second bailout, Greece is seen as certain to default in mid-March, when a debt repayment comes due. Read more about talks between Greek party leaders.
“At the start of the week, the press was full of talk that there was a deadline at midday in Greece for agreement to be reached. The mood was ‘risk off,’ and the positive sentiment stemming from Friday’s strong U.S. employment and non-manufacturing ISM data, was wiped out,” said Kit Juckes, head of currency strategy at Societe Generale.
“As ever, the deadline has passed, Greece has not yet defaulted, and the wind hasn’t been taken completely out of the risk rally’s sails,” he said.
The dollar weakened on Friday after data on U.S. nonfarm payrolls for January came in much stronger than expected.
“The fact that encouraging data releases will not alter the Federal Reserve’s dovish stance implies U.S. bond yields will remain compressed, giving no support for the U.S. dollar from higher U.S. yields for some time yet,” said strategists at Credit Agricole.
Still, a “disorderly default” by Greece could work to the benefit of the greenback, they said.
Also Monday, the dollar USDJPY +0.01% gave up early gains versus the Japanese yen to trade at ¥76.59 in recent action, down slightly from ¥76.62 late Friday.
The odds of intervention on behalf of the Japanese currency have “increased significantly as U.S. dollar/yen brushes the psychologically important 76.00 yen level. However, the feeling on the ground is that U.S. dollar/yen will need to broach 75.0 before intervention is actually seen,” the Credit Agricole strategists said.
The British pound GBPUSD -0.18% traded at $1.5767, from $1.5817 on Friday. The Australian dollar AUDUSD -0.44% changed hands at $1.0716, down from $1.0777.
