Euro pulls away from 2-week high as investors fret over Greece debt crisis

The euro pulled away from a more than two-week high against the dollar on Friday after German yields came off recent highs and investors fretted over Greece’s debt crisis as they awaited the US non-farm payrolls report later in the session.

The euro slipped about 0.2 per cent on the day to $1.1217, after the yield on German 10-year Bunds fell back to 0.83 per cent from its session peak of about 1 per cent, its highest level since late September 2014.

Greece debt deal

Greece’s ongoing struggle to reach a deal with its lenders and avert a default continued to pressure the euro. The country has delayed a key debt payment to the International Monetary Fund due on Friday as Prime Minister Alexis Tsipras has demanded changes to tough terms from creditors for aid.

The IMF said Athens planned to bundle four payments due in June into a single €1.6 billion lump sum which is now due on June 30.

Euro vs other currencies

Against the yen, the euro slipped about 0.1 per cent to 139.60, well above last week’s low of 133.10 but pulling away from its high of 141.06 touched in the previous session, its loftiest level since early January.

The dollar was last slightly up on the day against its Japanese counterpart at 124.45 yen, within sight of a 12-1/2-year high of 125.07 hit on Tuesday.

An index tracking the dollar against a basket of rival currencies was still on track for a weekly loss of more than 1 per cent, though the dollar index was up about 0.2 per cent on the day at 95.607.

US jobs report

Later on Friday, economists polled by Reuters expect the report will show US employers added 225,000 jobs in May, which would reinforce expectations that the US Federal Reserve could raise interest rates as early as September. Expectations of higher rates would give the greenback a lift.

“If the figure is within expectations, the dollar could touch 125 again,’’ said Kaneo Ogino, director at Global-info Co in Tokyo, a foreign exchange research firm.

“There are commercial orders hoping to buy on dips if payrolls disappoint, and these people will have to cover at higher levels if the dip doesn’t come,’’ Ogino said.

New York Fed President William Dudley is scheduled to speak on the economy and monetary policy after the jobs data is released, and investors will be eager to hear his views on the labour market as well as the broader economic picture.

US economic data

US data had on Thursday underpinned the dollar and gave investors no reason to pare their rate-hike bets.

First-time applications for unemployment aid fell last week and the number of people on benefit rolls hit the lowest level since 2000, while US nonfarm productivity fell more sharply than initially thought in the first quarter. The latter pushed up labour-related production costs, a trend that could ignite inflation if sustained.

The Australian dollar added 0.2 per cent to $0.7703, pulling away from a two-month low of $0.7595 hit on Monday, and also off the previous session’s lows plumbed in the wake of downbeat economic data that revived expectations that the Reserve Bank of Australia might ease further.

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