The dollar strengthened against the yen and euro on Tuesday after Greece finally agreed to a debt deal with its creditors, allowing market focus to shift back towards U.S. and European yield differentials. The greenback performed well against its Japanese peer, which lost its safe-haven appeal with the worst-case-scenario of Greece exiting the euro seemingly averted.
The dollar was steady at 123.46 yen after touching a 12-day high of 123.74 yen JPY=, having pulled away from a near two-month low of 120.41 struck last week. The U.S. currency also stood tall against the euro. With the Greek debt saga off centre stage, the spotlight returned to when the Federal Reserve will begin hiking interest rates. In contrast, the European Central Bank and the Bank of Japan are seen continuing with their super easy monetary policies for the foreseeable future.
The euro was little changed at $1.1007 EUR= after shedding about 1.5 percent overnight, weighed down in part by an decline in German Bund yields. “Things simply reverted back to dollar-buying, with many in the market swiftly dropping Greece as a factor,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.