NEW YORK: The euro fell on Tuesday as traders looked beyond an endless stream of headlines indicating progress in Greek debt talks while the dollar gained traction from solid U.S. housing data.
In Asia, a survey on Chinese manufacturing showed that factory activity may be stabilising but not stopped contracting, undermining commodity currencies.
The common currency dropped 0.6 percent in Asia to trade at $1.1268, falling more than a full cent from Monday’s high of $1.14105.
Despite more optimism on Greece in global equity markets and elsewhere, a cautious mood prevailed in the currency market as a deal remains elusive and as the euro zone’s economic outlook pales in comparison to others.
“Frankly, we just don’t know what will happen next so we need to see how things will unfold. The euro’s levels are still high and people are scared of its downside in case the talks break down,” said Kyosuke Suzuki, managing director of forex at Societe Generale in Tokyo.
Euro zone ministers on Monday welcomed new reform proposals from Greece as a possible basis for an agreement to avert a looming default ahead of its payment to the International Monetary Fund at the end of the month.
Yet, both German Chancellor Angela Merkel and the IMF’s managing director, Christine Lagarde, said there was still a lot of work to be done.
