Dollar slips on home data, euro climbs on Greek hopes

SYDNEY – The dollar nursed losses early on Friday after yet more underwhelming US economic news, while signs that cash-strapped Greece was making tentative progress in securing fresh funding helped underpin a broad rally in the euro.

 

The common currency last stood at $1.0822, having powered up from Thursday's low of $1.0666. The latest rally came as German Chancellor Angela Merkel said everything must be done to prevent Greece from running out of money.

 

Greek Prime Minister Alexis Tsipras also said he was optimistic of reaching a deal with the country's creditors after making significant progress in reform-for-cash negotiations.

 

Against the yen, the euro rose as far as 129.66, a high last seen on April 9. It also advanced on sterling and hit a two-week high versus its New Zealand peer at NZ$1.4290.

 

In contrast, the dollar wilted in the face of more disappointing data, among them an 11.4 percent slide in new home sales in March. While that was the biggest monthly decline since July 2013, it followed three straight months of hefty gains.

 

Still, it gave the market a fresh excuse to cut bullish dollar positions. As a result, the dollar index dipped 0.6 percent on Thursday, wiping out all of this week's gains to be 0.2 percent down on the week.

 

The dollar fell back below ¥120.00 to last trade at 119.62.

 

"Despite the softer data, we think the market is going to remain focused on risks of a more hawkish Fed message next week, and risks to US front-end yields remain skewed to the upside from current low levels," analysts at BNP Paribas wrote in a note to clients.

 

The Federal Reserve holds a policy meeting on April 28 and 29 and there is certain to be much debate on when interest rates should start to rise.

 

"We remain bullish on the USD, and continue to run a short EURUSD spot recommendation alongside derivative exposure to USDCHF and USDJPY upside," said BNP.

 

Renewed weakness in the greenback helped the New Zealand dollar trim some of its losses. Investors had hit the kiwi hard on Thursday in response to dovish comments from the Reserve Bank of New Zealand.

 

The kiwi last stood at $0.7589, having fallen as far as $0.7537.

 

Another notable mover was the Swiss franc, which recovered almost all of the losses it suffered on Wednesday. The dollar fell back to 0.9555 francs, from 0.9715. The euro dipped to 1.0334 francs, from 1.0428.

 

There is little in the way of market-moving economic data out of Asia. A survey on German business morale and US durable goods data are on offer later in the session. – Reuters