Euro Set for Best Quarterly Gain Since 2011 on Greece Optimism

The euro is set for its best quarterly performance since the first three months of 2011, underpinned by speculation creditors will give Greece a bailout.

The single currency rose against most of its major peers Tuesday after European officials signaled confidence that a deal would be reached on Greek aid as a June 30 deadline approaches for payments due to global creditors. Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of his euro-area counterparts, said the plan from Greece was a positive step. The euro has risen 5.7 percent this quarter versus the dollar.

“Hopes are likely to heighten for a positive outcome over the Greek issue before an European Union summit later this week after Greece signaled readiness to compromise,” said Yujiro Goto, currency strategist at Nomura Holdings Inc. in London.

The euro was little changed at $1.1345 and 140.01 yen at 8:43 a.m. in Tokyo. The dollar was at 123.42 yen from 123.37.

Europe’s single currency has climbed 3 percent in the past month, the second-best performer behind the Swedish krona in a basket of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.

Greek stocks and bonds surged on Monday after Prime Minister Alexis Tsipras’s government submitted new proposals addressing the areas of pensions, sales taxes and fiscal targets that had proven the chief barriers to a deal. European leaders urged Tsipras to make a final push to satisfy creditors and end a five-month standoff over aid.

Mixed Reaction

Market reaction suggests that equity and bond markets were positioned for a higher Greek event risk, while the currency markets were probably driven by positioning, strategists including Peter Jolly, the Sydney-based head of market research at National Australia Bank Ltd., wrote in a note dated June 23.

Australia’s dollar was at 77.26 U.S. cents from 77.28 before Chinese manufacturing data are released Tuesday.

“Greece headlines will still play a part, but attention should switch to global activity with PMIs from China, Europe and the U.S. giving currency direction a fundamental underpinning,” Sam Tuck, an Auckland-based senior currency strategist at ANZ Bank New Zealand Ltd., wrote in a note dated June 23.

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