Dollar Tad Higher Against Yen, Euro Ahead of Greece Summit

 
   By Hiroyuki Kachi 
 

        The dollar was slightly higher against the yen and the euro in Asian trade Tuesday as investors avoided making big moves ahead of Athens' presentation of bailout proposals at an emergency summit in Brussels later in the day.
        Around 0450 GMT, the dollar was at Y122.66, compared with Y122.57 late Monday in New York.
        The U.S. currency was also a tad higher against the euro, which fell to $1.1029 midday, compared with $1.1057 overnight. The euro was at Y135.28, from Y135.52.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.15% at 87.44.
        After Greece's vote Sunday to reject its international creditors' bailout conditions, investors will be keenly awaiting news from a planned summit scheduled for Tuesday evening. German Chancellor Angel Merkel and French President Francois Hollande on Monday called on Greece to craft urgent proposals to prevent an exit from the euro zone.
        "The biggest trading cues to the market will be what proposals Greece will provide later tonight," said Shusuke Yamada, chief Japan FX strategist at Merrill Lynch.
        The Greek government faces default as a payment to the European Central Bank comes due later this month. "The market remains vulnerable to turn around into risk-off mode again," Mr. Yamada said.
        The Greek government must pay 3.5 billion euros to the ECB on July 20 to redeem bonds held under a market-stabilization program. If Athens fails to make that payment, it would be very hard for the ECB to justify even maintaining the existing stock of emergency loans.
        "Regardless of the outcome [of Greece's negotiations with creditors], the main scenario is a moderate pace of dollar strengthening and yen weakening," FPG Securities Chief Executive Koju Fukaya said in a note, adding that U.S. economic fundamentals and monetary policy are what investors should eventually take into consideration.
        In the event of a rate increase by the U.S. Federal Reserve in September, or signs that such a move is imminent, the dollar will likely strengthen to near Y125 and then to Y127 by end of this year, Mr. Fukaya said.
        Among other currency trade pairs, the Australian dollar remained steady after the Reserve Bank of Australia, as expected, left rates unchanged at a record low 2%. The Australian currency was at $0.7478 and Y91.72 midday after the decision, compared with $0.7500 and Y91.91 overnight.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        July 07, 2015 01:30 ET (05:30 GMT)

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