4:06 PM
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TORONTO (Dow Jones)--The U.S. dollar was modestly lower in holiday-thinned trade Monday as the euro brushed aside concerns triggered by Standard & Poor's warning on Greece's debt.
Standard & Poor's warning that a debt rollover plan for Greece would be akin to a default rattled markets and negated the positive momentum seen after euro-zone ministers approved funding for Greece this past weekend.
Late Monday, the euro was at $1.4541 from $1.4528 late Friday, according to EBS via CQG. The dollar was at Y80.77 from Y80.86, while the euro was at Y117.47 from Y117.45. The U.K. pound was at $1.6090 from $1.6067. The dollar was unchanged at CHF0.8475.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 74.254 from about 74.298.
"There's been very little movement today. I wouldn't expect the euro to fall too far with the possibility of an ECB rate hike later in the week," said Shaun Osborne, chief FX strategist at TD Securities in Toronto.
European Central Bank President Jean-Claude Trichet had said the bank was "strongly vigilant" on inflation, which many see as the ECB's willingness to increase rates even in the midst of a debt crisis.
"We'll look at the ECB's language surrounding the decision," Osborne said.
The tone of the market was broadly more positive toward risky assets, but some market participants said the swing of optimism last week that was sparked by Greece's agreement to austerity measures likely will fade away, with the markets more likely to look intently at economic data coming out of China and the U.S. this week.
"With quantitative easing now over, investors will look for an end to soft data from the U.S., but a continued fall in manufacturing in China could see optimism on global economic growth dissipate," said David Watt, senior currency strategist at RBC Capital Markets.
Investors also will take cues from a rather full economic calendar that will include readings on the U.S. services sector and June payrolls.
"With some of the key hurdles on Greece now past, the focus will turn to the debt ceiling issue in the U.S.," said Steve Butler, managing director at Scotia Capital in Toronto.
The U.S. faces an unresolved debt-ceiling issue. The White House and congressional leaders are working to strike a deal that slashes budget deficits and raises the $14.29 trillion federal debt ceiling before Aug. 2, when the Treasury Department says the U.S. will default if Congress doesn't raise the legal limit.
"The U.S. ceiling issue could make the markets nervous if it goes right down to the wire. We're watching the trendline support on the dollar rather than the resistances as this thing moves forward," Watt said.
-By Satish Sarangarajan, Dow Jones Newswires; 416-306-2020; satish.sarangarajan@dowjones.com
Standard & Poor's warning that a debt rollover plan for Greece would be akin to a default rattled markets and negated the positive momentum seen after euro-zone ministers approved funding for Greece this past weekend.
Late Monday, the euro was at $1.4541 from $1.4528 late Friday, according to EBS via CQG. The dollar was at Y80.77 from Y80.86, while the euro was at Y117.47 from Y117.45. The U.K. pound was at $1.6090 from $1.6067. The dollar was unchanged at CHF0.8475.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 74.254 from about 74.298.
"There's been very little movement today. I wouldn't expect the euro to fall too far with the possibility of an ECB rate hike later in the week," said Shaun Osborne, chief FX strategist at TD Securities in Toronto.
European Central Bank President Jean-Claude Trichet had said the bank was "strongly vigilant" on inflation, which many see as the ECB's willingness to increase rates even in the midst of a debt crisis.
"We'll look at the ECB's language surrounding the decision," Osborne said.
The tone of the market was broadly more positive toward risky assets, but some market participants said the swing of optimism last week that was sparked by Greece's agreement to austerity measures likely will fade away, with the markets more likely to look intently at economic data coming out of China and the U.S. this week.
"With quantitative easing now over, investors will look for an end to soft data from the U.S., but a continued fall in manufacturing in China could see optimism on global economic growth dissipate," said David Watt, senior currency strategist at RBC Capital Markets.
Investors also will take cues from a rather full economic calendar that will include readings on the U.S. services sector and June payrolls.
"With some of the key hurdles on Greece now past, the focus will turn to the debt ceiling issue in the U.S.," said Steve Butler, managing director at Scotia Capital in Toronto.
The U.S. faces an unresolved debt-ceiling issue. The White House and congressional leaders are working to strike a deal that slashes budget deficits and raises the $14.29 trillion federal debt ceiling before Aug. 2, when the Treasury Department says the U.S. will default if Congress doesn't raise the legal limit.
"The U.S. ceiling issue could make the markets nervous if it goes right down to the wire. We're watching the trendline support on the dollar rather than the resistances as this thing moves forward," Watt said.
-By Satish Sarangarajan, Dow Jones Newswires; 416-306-2020; satish.sarangarajan@dowjones.com
Posted in: Trade Forex
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