Greek Bailout Hopes Lift Euro

 
Snapshot: 

        -Dollar dips; U.S. 10-year Treasury yield 2.005%; U.S. stock futures gain; oil futures extend gains; gold higher
        -Watch for: University of Michigan Survey; earnings from Interpublic, Burger King
        News: Eurozone GDP Grew 0.3% in 4th Quarter; Europe Stocks Touch Seven-Year High; Japan GDP May Show Rebound After Recession
        The dollar fell against the yen in Asia, as a weaker-than-expected outcome to a government bond auction made traders jittery and raised doubts about the Bank of Japan's future policy.
        "The poor five-year bond auction results have raised speculation that the BOJ may be finding it difficult to take further easing steps," said Takahiro Iizuka, trader at Mizuho Trust and Banking Co.
        Such views come on the heel of reports Thursday, citing people familiar with the BOJ's thinking, as saying that some officials were viewing further easing as counterproductive for the economy.
        "The currency market turned a risk-off mode after the auction," said Yuji Saito, executive director of foreign exchange at Crédit Agricole Corporate & Investment Bank. The yen, perceived as safe haven currency, tends to be bought when investors sentiment becomes cautious.
        Mr. Saito said the dollar could continue to be roughly in a "Y115-Y120" range next week, as the number of market participants is expected to decrease due to the lunar new year holidays in many Asian countries.
        Hopes of a compromise over Greece's bailout boosted the euro, which extended gains in European trade. The common currency was 0.2% higher against the dollar at $1.1427.
        U.S Treasury yields moved higher as European risk markets continued to benefit from the perceived goodwill between Greece and the eurozone over debt negotiations and Thursday's Ukraine, Russia ceasefire.
        At 5.39am ET, the U.S. 10-year yield was 2.005% and the March contract traded 6/32 lower at 128-075.
        Press reports that the European Central Bank boosted the amount of emergency lending it provides to Greek banks by EUR5 billion ($5.7 billion) pushed Greek government bonds sharply higher, with the 10-year yield falling nearly a percentage point to 9.26%. Spanish, Italian and Portuguese debt also gained.
        U.S. stocks were poised for another upbeat trading day, with stock futures mirroring gains in Europe and Asia, with consumer sentiment and import-price data on tap to give clues to the health of the U.S. economy.
        Futures for the S&P 500 index added 4.20 points, or 0.2%, to 2,088.30, indicating that the benchmark could nudge a record close. Futures for the Dow Jones Industrial Average added 42 points, or 0.2%, to 17,974, while those for the Nasdaq 100 index climbed 13.50 points, or 0.3%, to 4,358.25.
        After a data-heavy Thursday, Friday brings only the import-price index, due at 8.30am ET, followed by consumer sentiment at 9.55am ET.
        Analysts at Société Générale said they expect import prices to have dropped 3.7% in January, which would mark the largest decline in six years. The slide in foreign petroleum costs, lower metals prices and the impact of a stronger dollar all weaken import prices, they said. For consumer sentiment, economists polled by MarketWatch see a slight improvement to 98.5 in February, from 98.1 in January.
        Crude-oil futures extended Thursday's sharp gains, with Brent crude testing the $60 mark on reports of spending cuts by oil companies and a weaker U.S. dollar.
        On the New York Mercantile Exchange, light, sweet crude futures for delivery in March was at $51.94 a barrel in recent trade, up $0.74, or 1.4%, in the Globex electronic session. Brent crude for April delivery rose $0.99, or 1.6%, to $60.27 a barrel on London's ICE Futures exchange.
        Oil prices have swung wildly since their recent 20% rally as some traders entered the market at low prices expecting that prices have bottomed, while others booked profits when prices rose. Prices have settled higher or lower by more than 2% for 10 straight trading days, the longest streak of this kind since the 21-day period from Dec. 4, 2008 to Jan. 5, 2009.
        Spot gold in Europe was higher, trading up 0.5% at $1,227.50/oz, on a wave of short-covering.
        However, some analysts still see the bears closing in on the metal. "Short-covering may lift gold for the time-being, but post-Chinese New Year when the dust has been done and settled, we could see gold taking a tumble again. Tensions over Ukraine have abated and a hopeful easing of Greek debt uncertainties may lift the safe-haven support for the precious metal," said Howie Lee, an investment analyst at Phillip Futures.
        Eurozone GDP Grew 0.3% in 4th Quarter
        A strong pickup in Germany led an acceleration in eurozone economic growth in the final three months of 2014, but large parts of the currency area were either close to stagnation or still contracting.
        Europe Stocks Touch Seven-Year High
        European stock markets were on course to end a volatile week at seven-year highs, helped by signs of a modest improvement in the eurozone economy and hopes that Greece can reach a deal with its creditors.
        Japan GDP May Show Rebound After Recession
        Japan's economy likely crawled out recession in the last quarter of 2014, helped by rising exports and a sharply weaker yen, a survey of economists by The Wall Street Journal shows.
        Eurozone Not Yet in Deflation, ECB's Constancio Says
        The eurozone is not yet experiencing deflation despite prices falling in January, European Central Bank Vice President Vitor Constancio said at a dinner in London.
        ECB's Weidmann: Saw No Immediate Need for QE
        There was no urgent need for the European Central Bank to embark on a program of quantitative easing, Governing Council member Jens Weidmann said.
        Write to paul.larkins@wsj.com
        (END) Dow Jones Newswires

        February 13, 2015 06:16 ET (11:16 GMT)

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