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Dollar firm after upbeat data

Dollar firm after upbeat data

Friday, February 20 08:13:32

The dollar held firm on Friday after upbeat U.S. jobless claims data made views swing back in favour of an earlier rate hike by the Federal Reserve, while the euro stayed under pressure ahead of a crunch meeting on Greece’s bailout programme.

The dollar index stood at 94.367 , having gained 0.2 percent on Thursday as traders put their focus back on the relative strength of the U.S. economy.

Initial claims for state unemployment benefits fell 21,000, about twice as much as expected, to a seasonally adjusted 283,000, offering fresh evidence the U.S. labour market was gathering steam.

The data helped reverse expectations of a possible delay in Fed rate hikes that arose when minutes of its last policy meeting, published on Wednesday, showed policymakers were concerned about increasing rates too soon.

U.S. debt yields also rose on Thursday, helping to lift the dollar, particularly against the yen, which traditionally has a strong inverse correlation with U.S. yields.

The dollar fetched 118.89 yen, compared to Thursday’s low of 118.42 yen.

The euro traded at $ 1.1364, off Thursday’s high of $ 1.1450. It has largely stuck to a narrow $ 1.1300-1.1450 range this week, as all eyes remain on talks between Greece and the euro zone.

With Greece’s EU/IMF bailout programme due to expire on Feb. 28, Greek Prime Minister Alexis Tsipras, who won power promising to ditch the bailout, urgently needs to secure a financial lifeline to keep the country afloat beyond late March.

So far, guarded optimism is prevailing in the market, chiefly on the grounds that failure to strike a deal would be too costly for both as it could risk a Greek debt default and exit from the euro.

On Thursday, Germany rejected a Greek proposal for a six-month extension to its euro zone loan agreement, ahead of the euro zone finance ministers’ meeting on Friday.

But in a document seen by Reuters, Greece appeared to have moved substantially toward the position taken by euro zone finance ministers in negotiations on Monday that ended without a deal, as Athens vowed to ditch the 240 billion euro bailout programme.

Yields on Greek and other lower-rated euro zone bonds slid on Thursday on hopes of an agreement. (Reuters)

For more visit: www.businessworld.ie

 

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