NEW YORK: Ongoing Greek debt talks sidelined currency investors on Thursday, demonstrating their unwillingness to take bold positions as deadlines for a deal come and go, leaving the euro unchanged against the greenback.
Even upbeat U.S. economic data did little to help the dollar advance. U.S. consumer spending recorded its largest increase in nearly six years on strong demand for automobiles and other big-ticket items, bolstering evidence of gathering growth momentum in the second quarter.
"Watching Greek headlines. That's kind of holding markets back," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.
"This week we have seen appetite to start rebuilding dollar long positions," he said. "Markets are feeling more confident that U.S. data is rebounding and the dollar will do well."
The euro was down just 0.07 percent at $1.11970, hemmed in on the upside by the 20-day moving average of $1.1230 on the EBS trading platform.
Earlier, the Swiss franc fell to a 10-day low against the euro after the head of the Swiss National Bank said it was "considerably over-valued" and that the SNB would continue to intervene in currency markets..
In midday New York trade, the euro was up 0.37 percent at 1.05010 Swiss francs.
A failure by Greek officials to reach an aid-for-reforms deal with the country's creditors would likely spark massive safe-haven flows into the Swiss currency.
"The Swiss are always going to try and talk their currency down," said one currency trader at a major international bank in London.
The euro has traded in the $1.09-$1.14 area for several weeks, with strategists arguing over the extent to which it has been affected by talks on Greece.
Some analysts reckon that with the market betting some sort of a Greek deal will be reached, the euro's direction against the dollar can once again be dictated by fundamental factors. With ultra-loose monetary policy in the euro zone and U.S. interest rates seen moving higher, that means a weaker euro.
Neil Mellor, a currency strategist at Bank of New York Mellon in London, said the euro would fall if there is deal on Greece as investors have used it for carry trades, borrowing it and then selling it to buy higher-yielding currencies.
"What has been fairly clear is that every time there's a chance of a deal the euro plummets, and every time there's disappointment coming along, it reverses course," he said.
Comments
Comments are closed for this article.