Euro slips as Greek stocks tumble, investors await key US data
The euro fell against the dollar on Monday, giving up earlier gains, as the Greek stock market plunged following a five-week shutdown brought on by fears the country was about to be dumped from the euro zone.
The euro slipped as low as $1.0957, having traded at $1.0990 in early London trade, with most investors already positioned for huge losses in Greek shares.
Losses in the common currency were capped by data showing euro zone factory activity grew faster than previously thought in July, with attention now turning to U.S. data.
"The drop in the Greek stock market has put the euro under slight pressure," said Yujiro Goto, currency strategist at Nomura. "A lot, though, will be depend on the U.S. data and most investors want to stay long dollars against the euro."
The greenback took a hit late last week from below-par wage growth data that clouded the outlook over when U.S. interest rates are likely to rise.
But analysts said the dollar could draw strength from U.S. economic indicators this week, including the Institute for Supply Management's report on U.S. factory activity due Monday and nonfarm payrolls data on Friday.
The dollar traded at 97.381 against a basket of six major currencies on Monday, up slightly on the day but well below a one-week high of 97.773 set last Thursday.
"The dollar is still a better bet than the euro and its commodity-bloc counterparts," said Jeremy Stretch, head of currency strategy at CIBC World Markets. "The ISM data and the non-farm payrolls data could see the impact from the employment cost index report fade by the end of the week."
The dollar's selloff on Friday could have been worse if not for hawkish comments from St. Louis Federal Reserve President James Bullard. Bullard, who has long called for tightening, was quoted in a Wall Street Journal report as saying the latest U.S. growth data boosts the case for a hike in September.
His comments helped the dollar pare losses late into the U.S. session on Friday. Yet U.S. Treasury yields still hovered near troughs hit on Friday, suggesting some doubts remained about the timing of a Fed hike.
The dollar was up 0.2 percent against the yen at 124.17 yen.
The Australian dollar was lower at $0.7290, hurt by an official survey that showed growth at China's big manufacturing companies unexpectedly stalled in July as demand at home and abroad weakened. The Aussie is often used as a liquid proxy for China plays.