The euro strengthened the most in one week against the dollar on speculation that Greece and its creditors will reach a deal to receive aid payments before the country runs out of money.
The common currency climbed against most of its major peers after a senior Greek government official said the nation and its creditors haven’t discussed a potential default or a missed payment to the International Monetary Fund. U.S. jobless claims increased and sales of new homes slumped, adding to evidence U.S. economic growth remains uneven and damping demand for the dollar.
“We’re having a slight relief rally” in the euro, Eimear Daly, a currency strategist at Standard Chartered Plc in London, said by phone. “Even hearing some kind of optimism is supporting the currency.”
The euro gained 0.7 percent to $1.0802 as of 11:19 a.m. in New York, reaching the biggest gain since April 16. It advanced 0.6 percent to 129.32 yen.
Talks between Greece and euro-area finance ministers will shift to Riga, Latvia, on Friday as officials attempt to persuade Greece to commit to economic reforms so that aid payments can be released.
The euro “remains quite resilient against most Group of 10 currencies despite lingering uncertainty about Greece,” Valentin Marinov, head of G-10 foreign-exchange research at Credit Agricole SA’s corporate and investment-banking unit in London, said in a note. “Investors are willing to wait for a successful resolution with their confidence in the single currency.”
The euro pared its decline this year amid the European Central Bank’s quantitative-easing stimulus plan that started last month. The central bank pledged to buy 60 billion euros ($64 billion) of public debt each month through September 2016, to ward off deflation and bolster economic growth.
The currency has dropped 7.6 percent this year, making it the worst performer against a basket of peers tracked by Bloomberg Correlation Weighted Indexes.
Applications for U.S. unemployment benefits increased by 1,000 to 295,000 in the week ended April 18, a Labor Department report showed. The median forecast of 55 economists surveyed by Bloomberg called for 287,000.
The jobless data were “a bit disappointing,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia, by phone from Toronto. “All the stars that had aligned for a strong U.S. dollar have shifted a little bit and we have a more balanced outlook,” she said.
The dollar extended losses after Commerce Department data showed purchases of new U.S. homes slumped more than forecast in March from a seven-year high, a sign progress in the industry will be halting.