MW: Dollar weakens slightly as Greece worries ease
By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The dollar retreated slightly as worries over the fate of Greece’s debt swap appeared to ease Wednesday, but traders trimmed its losses after a measure of U.S. private-sector employment rose.
The ICE dollar index DXY -0.01% , which measures the greenback against a basket of six currencies, stood at 79.762, slightly down from 79.843 late Tuesday.
The ADP employment report showed private-sector payrolls rose 216,000 in February. The report is closely watched for what hints it might supply about the U.S. government’s jobs estimate, which is set for release on Friday. Read about ADP.
U.S. and European equities tumbled Tuesday as worries rose over the execution of Greece’s private-sector debt swap. Failure to complete the swap could prove a stepping stone to a chaotic default, strategists have warned.
More investors late Tuesday and Wednesday said they would participate in the exercise, however.
The Institute of International Finance said earlier Wednesday that 30 members of its private creditor-investor committee for Greece plan to participate in the swap. They hold 81 billion euros ($106.5 billion) of outstanding debt, or 39.3% of the €206 billion of the eligible privately held paper. Read about IIF.
Investors have until Thursday night to participate.
The euro EURUSD +0.06% traded at $1.3117, little changed from $1.3111 in late North American trading on Tuesday.
Investors are also looking ahead to Thursday’s European Central Bank meeting. The central bank is expected to leave policy unchanged, with ECB President Mario Draghi seen as likely to strike a wait-and-see stance on the need for further measures after flooding the financial system with long-term liquidity via special refinancing operations in December and February. Read about the ECB.
“In all honesty ... the size of today’s market moves is small when compared to the trend exhibited this week. Tomorrow’s ECB announcement and Draghi’s questions are likely to be overshadowed by the [debt-swap] decision later that evening, followed by [U.S. nonfarm payrolls] on Friday,” said Lauren Rosborough, strategist at Societe Generale.
“The S&P 500 needs to close the week above 1,365 at a bare minimum in order to stem any further elimination of the risk-appetite trade,” Rosborough added. The U.S. equities benchmark SPX -1.54% stood at 1,343 following Tuesday’s big downdraft on Wall Street.
Also Wednesday, the shared European currency EURJPY +0.06% bought 105.91 yen, down from ÂĄ105.97 late the previous day.
The dollar USDJPY -0.01% bought ÂĄ80.75, down from ÂĄ80.81, while the British pound GBPUSD +0.07% was little changed at $1.5708.
The Australian dollar AUDUSD +0.01% traded at $1.0554 versus its U.S. counterpart, up from $1.0533, recovering slightly after the release overnight of a weaker-than-expected gross domestic product reading sent the currency lower. Read more on Australian GDP.
On Tuesday, the Australian currency lost 1.4% on the greenback to hit a low not seen in more than a month.
