Dollar Firmer as Greek Deadlock Continues to Weigh

 
Snapshot: 

        -Dollar firmer; 10-year Treasury yield at 2.31%; U.S. stock futures gain; Nymex crude around $60; gold at $1199.05
        -Watch for: no major data scheduled
        News: BOJ Kuroda Turns Cautious About Commenting on Yen; Eurozone Summit Called on Greece; Finra Hosts Closed-Door Meeting on Bond Trading;
        The euro slipped 0.4% to $1.1320 in early European trade Friday, undoing some of its recent gains against the dollar.
        The euro has proved resilient to the intensifying Greek crisis in recent weeks, as growing volatility in markets prompted investors to scale back their negative bets on the currency.
        On Friday, the Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, rose 0.3%.
        Bank of Japan Gov. Haruhiko Kuroda turned cautious about commenting on the foreign exchange market on Friday after recent remarks he made jolted the market, leaving his views vague and stressing that the market should move stably by reflecting economic fundamentals.
        "It wouldn't be good to see the yen keep weakening, but I don't think a further fall in the yen is a big minus for the economy," Mr. Kuroda told reporters at a press conference after a two-day policy board meeting where the policy board decided to keep its key policy on hold.
        Asked whether a weakening of the yen would deprive the BOJ of its flexibility in steering monetary policy, he dismissed such views, saying that monetary policy does not target exchange rates but is purely aimed at achieving price stability.
        He also reiterated that his remarks last week did not foresee the future course of the yen's rate.
        U.S. Treasurys moved higher, pushing yields lower, as ongoing Greek debt jitters fuelled a core bid ahead of the weekend.
        The 10-year cash yield slipped to 2.31% while the September contract was 10/32 higher at 126-055.
        There are no data releases scheduled while the Federal Reserve's John Williams and Loretta Mester will be giving speeches.
        "In the past they have always spoken out for an earlier key rate increase. But it remains to be seen whether they can contribute to reviving interest rate speculation," said analysts at Helaba.
        In European bond markets, Greek yields eased back after their recent rise. Two-year Greek bond yields fell around a percentage point to 28.1%.
        Wall Street could register a fourth-straight session of gains on Friday, with futures tilting higher as investors continued to cheer a dovish tone set by the Federal Reserve earlier in the week.
        However, bubble worries surfaced in Asia, where Chinese stocks tumbled, dropping into correction territory, while Greece jitters stayed in the spotlight in Europe.
        Futures for the Dow Jones Industrial Average inched up 24 points to 18,067, while those for the S&P 500 index added 2.55 points to 2,117.25. Futures for the Nasdaq-100 index inched up 6.75 points to 4,537.
        Craig Erlam, senior market analyst at Oanda, said U.S. stocks continued to be propped up by relief that the Fed will only hike interest rates very gradually, which was a key takeaway from the central bank's news conference on Wednesday.
        "People accept now that interest rates are going to rise, but focus more on how fast are they going to rise. The fact that the Fed said it's going to be a slower pace of rate hikes is seen as dovish and that's really helping the market and carries through to the end of the week," he said.
        Eurozone leaders will hold an emergency crisis summit on Monday after finance leaders again failed to reach any kind of agreement between Greece and its creditors on Thursday. Monday's meeting, described as "make it or break it" by one European official, will take place days ahead of an already scheduled European Union leaders summit.
        Christine Lagarde, managing director of the International Monetary Fund, said the emergency summit was necessary "to restore a dialogue with adults in the room." Investors were also watching for news on more cash withdrawals out of Greek banks on reports that capital controls could be in place by Monday.
        Shares of Smith & Wesson could be in focus after the company's quarterly forecast fell short of expectations even as fourth-quarter adjusted earnings beat.
        Oil prices fell in Europe on the firming U.S. dollar as investors tracked the latest twists in the Greek debt negotiations and braced themselves for the looming deadline in the Iran nuclear talks.
        August-dated Brent, the global oil benchmark, fell 0.6% to $63.88 a barrel on London's ICE Futures exchange. The U.S. price marker, West Texas Intermediate for delivery in July, was flirting with $60 a barrel, trading down 0.7% on the New York Mercantile Exchange.
        A Greek default, which looks increasingly possible after eurozone finance ministers failed to clinch a deal on Greece's debt on Thursday, could hurt European oil demand, said Olivier Jakob or Petromatrix.
        "Greece will continue to make headlines and remains a risk for the weekend," Mr. Jakob said. According to him, most of the European oil demand growth this year is coming from the southern countries of Europe. Therefore if there was a Greek default and a contagion of a risk premium to other southern European countries it could have a negative impact on European oil demand, he said.
        Spot gold was lower in Europe, trading down 0.2% at $1,199.05/oz, as the dollar firmed.
        Looking ahead, safe-haven buying could pick up and help prices. "Lack of core economic releases today ... [shifts] focus to Greek woes, which may keep gold supported around the $1,200/oz level," said Howie Lee, an investment analyst at Phillip Futures.
        Eurozone Summit Called on Greece
        Eurozone leaders will try to clinch a deal on Greece's flailing bailout at a hastily called crisis summit Monday, after finance ministers failed again to bridge the gap between Athens and its lenders.
        Finra Hosts Closed-Door Meeting on Bond Trading
        Wall Street's self-regulator invited representatives from big banks, money managers and trading venues to its offices Thursday to discuss snags in the corporate bond market and whether steps could be taken to help withstand future shocks, a spokesman said.
        China Shares Fall Into Correction Territory
        The Shanghai Composite was headed for its worst week in more than seven years, as it fell into correction territory amid fears of a bubble in China's equity markets.
        Greece, Russia Strike Preliminary Gas Deal
        Greece and Russia signed a preliminary agreement Friday for cooperation on a pipeline that will bring Russian gas to Europe through Greece and Turkey.
        House Revives Fast-Track Trade Bill
        Mark Wilson/Getty Images
        The House passed legislation to ease trade pacts through Congress, as Republicans and some Democrats revived hopes for President Barack Obama's trade agenda less than a week after liberals sank a similar bill.
        Senate Democrats Stall Defense-Spending Bill
        Staff Sgt. Jason Robertson/U.S. Air Force/Reuters
        The Senate passed its annual defense policy bill before clashing over a broader fight about military and domestic spending that is likely to intensify as Congress nears the start of the new fiscal year.
        Denmark's Center-Right-Led Opposition Wins Parliamentary Elections
        Denmark's center-right-led opposition won parliamentary elections, denying the Social Democrat Prime Minister Helle Thorning-Schmidt a second term in office after a campaign dominated by the immigration issue.
        Envoy Says Tehran Doesn't Aid Afghan Taliban
        Iran's top envoy to Afghanistan said his country isn't providing weapons and cash to the Taliban, amid evidence that Tehran is backing the militant group as a counterweight to Islamic State.
        Write to Riva Gold at riva.gold@wsj.com
        (END) Dow Jones Newswires

        June 19, 2015 06:53 ET (10:53 GMT)

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