Euro Resilient as Investors Focus on Greece With One Eye on Fed

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The euro swung between gains and losses as investors weighed the chances of Greece striking a debt deal.

The single currency held Wednesday’s advance as Prime Minister Alexis Tsipras and European creditors prepared to meet again on Thursday to resume talks bailout-aid terms. A gauge of the dollar halted a four-day advance before a report on the U.S. labor market.

“It’s very difficult for the euro to rally on this in the near term,” said Mitul Kotecha, head of Asia Pacific foreign-exchange strategy at Barclays Plc in Singapore. “Clearly, there is still a lot of uncertainty about Greece.”

The euro was little changed at $1.1213 as of 8:26 a.m. in London, after advancing 0.3 percent to $1.1205 on Wednesday. It was at 138.70 yen from 138.78 the previous day.

Greece stumbled closer to default as another day of negotiations ended in the early hours of Thursday without a deal to end the standoff over bailout aid.

Technical teams were called to reconvene at 6 a.m. in Brussels, to be followed at 9 a.m. by the resumption of talks between Tsipras, International Monetary Fund chief Christine Lagarde, European Commission President Jean-Claude Juncker and European Central Bank President Mario Draghi.

Finance ministers will also meet again Thursday as the European portion of Greece’s 240 billion-euro ($269 billion) bailout is due to expire on June 30, the same day a 1.5 billion-euro payment to the IMF falls due.

Stimulus Focus

The euro is set to slide toward $1.06 in the coming weeks as the focus shifts to the European Central Bank’s record stimulus program from Greece, said Sean Callow, a strategist at Westpac Banking Corp. in Sydney. Bets on a weaker euro by hedge funds and other large speculators fell in the week ended June 16 to the least since July 2014, according to the Commodity Futures Trading Commission.

“That process of taking profits on euro has surely contributed to its resilience through the whole Greek thing,” Callow said. “There’s plenty of room for the speculators to load up again on short euro positions if they want to.”

The Bloomberg Dollar Spot Index declined before a report which economists forecast will show that more Americans filed for unemployment benefits last week. Fed policy makers are closely watching labor-market developments as they try to time their first interest-rate increase since 2006.

The dollar gauge slipped 0.1 percent to 1,177.68. The greenback was little changed at 123.72 yen.

“U.S. data remains the fundamental driver of currencies, while headline writers will continue to focus on Greece,” Sam Tuck, a senior currency strategist, and chief economist Cameron Bagrie at ANZ Bank New Zealand Ltd., wrote in a note dated June 25. “The lack of aggressiveness overnight across markets suggests that the central case remains for some sort of deal being struck.”

The analysts wrote they are “not so convinced.”

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