Euro Gains Against Dollar on Hopes of Greece Deal
The euro rose against the dollar Tuesday, after a meeting of international leaders in Berlin led investors to consider that an agreement between Greece and its creditors might be struck this week.
In early trade, the bloc’s single currency rose by around half a percent against the dollar to just under $1.10, having slipped in the previous session.
Late Monday, Greece’s international creditors were preparing the text of a final bailout deal to present to the Athens government, in a sign that lenders are running out of patience after months of stalled talks.
Greece is due to make a EUR300 million ($328 million) debt repayment to the International Monetary Fund on Friday–part of a total of EUR1.6 billion due to the IMF between June 5 and June 19.
Barclays economist Philippe Gudin said that Monday’s “extraordinary meeting shows that official creditors of the Greek government are strongly committed to […] avoiding a default, which would probably end up with a Greek exit from the single-currency union, setting a precedent that most European leaders and the ECB would prefer to avoid.”
“We still expect at least a partial compromise to be reached soon, possibly this week,” Mr. Gudin said, adding however, that the “risk of an accident is higher than ever.”
The Stoxx Europe 600, having recorded slim gains Monday, was 0.2% lower in early trade Tuesday. Germany’s DAX was down 0.1% while France’s CAC and London’s FTSE 100 were flat on the day.
In Asia on Tuesday, Japan’s Nikkei Stock Average ended its 12-day winning streak, narrowly missing out on matching its record stretch in 1988, as the yen slipped to its weakest in more than a decade against the dollar.
On Monday, an encouraging reading on U.S. manufacturing activity in May already pushed the buck higher against both the euro and the yen.
Later Tuesday, investors will be eyeing German unemployment figures as well as consumer data for the euro area.
In commodity markets, Brent crude rose 0.8% to $65.37 a barrel, while gold was flat at $1,188.80 per troy ounce.
Officials from the Organization of the Petroleum Exporting Countries are meeting in Vienna this week and are widely expected not to cut output targets despite the global glut of oil.