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Dollar steadies after pullback against euro
[TOKYO] The dollar steadied against major counterparts in early Asian trading on Monday, managing to regain its footing after a sharp drop against the euro on solid German data and higher Bund yields.
The euro was buying US$1.1281, down 0.1 per cent on the day and retreating from its overnight peak of US$1.1307, after better-than-expected German industrial output figures.
But Greece's ongoing talks to wrangle an agreement with its lenders capped the common currency's rise.
Greek officials met on Monday with EU Economics Commissioner Pierre Moscovici on what reforms Greece must implement to get new loans, but there was no new proposal from Athens to which its creditors could agree to, an EU official said. "Greek officials continue to reject the EU/IMF proposal so clearly no meaningful progress is being made which should have been negative for the currency and yet euro traded sharply higher," Kathy Lien, managing director of FX strategy for BK Asset Management, wrote in a note to clients. "We believe that selling euros on the 1.13 handle is an attractive opportunity," she said.
Greece can have only a minor influence on the euro, because of the country's small size and the euro zone's reforms, European Central Bank governing council member Christian Noyer said on Monday. "Greece represents 2 per cent of the euro zone economy so it's really marginal," Mr Noyer told an economic conference in Montreal.
The dollar index, which tracks the greenback against a basket of six major rivals, was steady on the day at 95.289 .
The dollar edged up about 0.1 percent on the day to 124.65 yen, after pulling back from its 13-year high of 125.86 yen touched on Friday after unexpectedly strong US job growth led to increased bets that the US Federal Reserve was on course to raise interest rates before year-end.
Wall Street's top banks now expect the Fed to begin hiking rates in September, followed by another hike before year-end, a Reuters poll showed.
On Monday, President Barack Obama denied a report that quoted him as saying the strong dollar was "a problem" during conversation at the Group of Seven (G7) summit in Germany, stating that he makes it "a practice of not commenting on the daily fluctuations of the dollar or any other currency."