Forexpros – The dollar rose against most major global currencies on Monday on weekend reports Greece is on track to miss debt targets and in danger of losing access to bailout funding.
Spiking bond yields in Spain, where talk a recession will stick around for another year, further fueled dollar demand as part of a risk-off trading session.
In Asian trading on Monday, EUR/USD was down 0.21% at 1.2130.
Talk of a possible Greek exit from the eurozone down the road fueled demand for greenbacks from investors seeking safe harbor.
Representatives from the European Commission, the European Central Bank and the International Monetary Fund are due to arrive in Greece to discuss the country’s steps to narrow its debt-to-GDP target to 120% by 2020.
Concerns are brewing the country is already on track to miss that target and risks seeing the flow of bailout money come to a halt, which could prompt the country to default and precipitate its exit from the currency zone.
German Vice Chancellor Philipp Roesler reiterated over the weekend Greece must adhere to austerity measures in exchange for bailout money.
Der Spiegel magazine, meanwhile, reported that the International Monetary Fund may be unwilling to participate in further bailout payments over Greece’s inability to meet certain debt-reduction targets, citing unnamed sources.
Fears of a Greek default and exit from the currency group, which could pressure the larger Spain to follow suit, sent investors snapping up positions in safe-haven currencies such as the U.S. dollar.
Meanwhile in Spain, Treasury Minister Cristobal Montoro said last week the country’s recession will extend into next year, with gross domestic product falling 0.5% in 2013 instead of expanding 0.2% as originally forecast, which further pressured the euro downwards.
Yields on the Spanish 10-year government note have spiked above the 7% threshold deemed unsustainable by the markets on fears Spain will need sovereign rescue funding.
Eurozone policymakers recently signed off on terms to give Spain EUR100 billion in bailout money to bolster its banks as well as regional governments, though investors fear the country itself will need a sovereign rescue, further fueling dollar demand.
Spain will go to the markets this week to sell short-term government debt and will also release its unemployment rates on Friday, which sent investors flocking to the dollar as part of a wait-and-see strategy.
The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.22% at 1.5586.
The dollar was down against the yen, with USD/JPY trading down 0.27% at 78.28, and up against the Swiss franc, with USD/CHF trading up 0.27% at 0.9906.
The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.23% at 1.0151, AUD/USD down 0.59% at 1.0317 and NZD/USD down 0.63% at 0.7946.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.19% at 83.77.
No major indicators are due out of the U.S. on Monday, though markets will look ahead to Friday, when second-quarter gross domestic product growth figures release.
Forexpros
