Dollar gains as investors cut positions in riskier euro
The dollar gained against the euro yesterday on concerns about how Greece will service its debt, with the dollar and the yen advancing as investors cut positions in riskier currencies.
The Japanese currency pared gains, however, after a lawmaker from Japan's ruling party said monetary easing and intervention to weaken the yen were needed to beat deflation. In early New York trade, the euro was down 0.6pc at $1.3497, just off a one-week low of $1.3490.
The $1.3500 level was seen as key because it marked the peak reached last Friday before the single currency gapped higher after last weekend in response to the agreement on terms of the Greek bailout deal.
"We think that the euro will remain under pressure because we have serious concerns about whether the euro can still be considered a hard currency," said Morgan Stanley Global Currency Research Team in a note to clients.
Gains in the dollar were capped, however, particularly after US two-year treasury yields fell below 1pc for the first time in three weeks.
Top US Federal Reserve officials have shown little urgency to softening the central bank's commitment to hold rates low for a long time, suggesting the Fed will repeat the pledge when it meets later this month.
Sterling fell on concerns a May 6 British election may result in no one party winning a majority. Sterling fell 0.6pc against the dollar to $1.5415, while risk aversion pushed the higher-yielding Australian dollar down 0.6pc to $0.9295.