Dollar Drifts Lower Against Euro, Yen

By James Ramage 

        The dollar edged lower against the euro and the yen on Wednesday as investors monitored Greece's bailout negotiations and awaited further indications of strength in the U.S. economy.
        The greenback fell 0.3% against the common currency, with one euro buying $1.1205, clawing back some ground from earlier losses.
        The dollar slipped 0.1% versus the yen to Yen123.85.
        The range-bound trading in the market highlights the degree to which investors remain unwilling to take sustained stronger views on the dollar, or rivals, until there are clearer signals from the Federal Reserve on rising U.S. interest rates. Investors were also waiting for an agreement between Greece and its international creditors to solve the cash-strapped nation's debt crisis.
        On Tuesday, the dollar soared while the euro swooned, after a Fed official boosted conviction in higher U.S. interest rates this year while Greece's bailout talks appeared to move closer to a resolution.
        On Wednesday, though, the dollar slipped against the euro after reports that Greece and its creditors remain far apart on key issues. Separately, data confirmed the U.S. economy contracted over the first three months of the year.
        Some investors booked profits on the dollar's recent gains against the euro ahead of further negotiations between Greece and its lenders over the coming days, Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange Inc., wrote in a research brief.
        June nonfarm payrolls numbers, due to be released on July 2, will likely provide direction for the dollar, said Richard Cochinos, head of Americas developed-market currency strategy at Citigroup Inc. "We're in a range-bound market, with most currencies responding to the barriers of those ranges," Mr. Cochinos said. "We're at a loss for macro news until next week."
        On Wednesday, data showed U.S. gross domestic product, measuring the amount of goods and services produced across the economy, contracted at a 0.2% seasonally adjusted annual rate in the first quarter, the Commerce Department said. The number met economists' predictions and indicated that the slowdown over the first three months of the year was less pronounced than the 0.7% decline previously estimated. The number, however, is regarded by investors as a lagging indicator of the economy.
        "We already knew the first quarter was weak," said Charles St-Arnaud, economist and currencies strategist at Nomura Securities. "Now it's important to see where we go from there. The Fed wants to see underlying momentum in the economy."
        Investors are waiting to increase their bets on the dollar's appreciation against other major currencies, a popular trade over the second half of 2014 and early this year that brought the greenback to multiyear highs against rivals. The dollar's ascent has stalled since mid-March, after lackluster U.S. data clouded expectations for the Fed's first interest rate increase in nine years.
        Higher borrowing costs would make the dollar more attractive to asset managers looking for a boost in their dollar-denominated assets.
        Write to James Ramage at james.ramage@wsj.com
        (END) Dow Jones Newswires

        June 24, 2015 17:00 ET (21:00 GMT)

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