Dollar Edges Higher Ahead Of Greek Meet

The dollar edged up a touch in Asian trading hours Wednesday, as nervousness set in ahead of Greece’s meeting with the Eurogroup.

The ICE dollar index DXY, which measures the greenback against a basket of six other major currencies traded at 81.953, from 81.939.

The dollar lost 1% against the euro on Tuesday amid growing optimism for European Central Bank intervention in the sovereign-debt markets after weekend reports suggested a debt-yield cap for the weaker nations’ bonds.

The euro EURUSD held at $1.2463 Wednesday, little changed from late Tuesday trading.

Greece’s prime minister is set to hold meetings with the Eurogroup leader on Wednesday and to meet German and French leaders this week as well.

There’s been speculation recently that the country will request more time to implement the austerity measures required by its international creditors.

Suggestions that Greece will get more time to meet those obligations could work to prompt more gains for the euro against the dollar, Credit Agricole strategists said, forecasting the common currency may test a $1.2530-$1.2610 range.

Still, “unless leaders go as far as signalling that the ECB is in fact ready to cap bond yields or spreads … we feel that the aforementioned ranges will still be appropriate ones to unload euro in aiming for sub-$1.2280 targets, as the recent rally has largely been ‘squeeze’ driven,” they said.

Among the other major currency pairs, the British pound GBPUSD traded at $1.5781, up slightly from $1.5779, while the Australian dollar AUDUSD  eased to $1.0453, down from $1.0473.

Against the Japanese yen, the dollar USDJPY bought ¥79.29, up from ¥79.25 in late trading on Tuesday, after Japan posted a swing to a July trade deficit, with exports falling more than expected.

Marketwatch