The dollar dipped versus the yen on Thursday, awaiting US data for fresh cues after giving back gains following an impasse in Greek debt negotiations. The euro was treading water after showing a more limited response. The US currency dipped 0.2 percent to 123.63 yen, pulling back from a one-week high of 124.38 reached overnight after data showed the US economy contracted in the first quarter but less than previously estimated.
The greenback had benefited as the market's focus appeared to shift back to the prospects of higher US interest rates from the Greek saga, which began the week with optimism that a deal would finally be concluded. But it lost traction as US debt yields fell when the talks stumbled yet again, with euro zone finance ministers accusing Athens of refusing to compromise despite a payment deadline looming fast next week.
The market will have another chance to check the pulse of the US economy when consumer spending growth indicators are released later in the day, with upbeat readings expected to add to the case for the Federal Reserve to hike rates later in the year. "The market's focus is on how much the US economy has recovered in the second quarter from the first quarter. There aren't many events in the Tokyo and London trading hours until the US consumer spending indicators are released, so a wait-and-see mood is likely to prevail until then," said Masashi Murata, a senior currency strategist at Brown Brothers Harriman in Tokyo.
The euro reacted less to the latest impasse in the Greek debt negotiations, sticking to a tight range and little changed at $1.1214, keeping some distance from a two-week low of $1.1135 hit on Tuesday. "Euro/dollar responded less compared with dollar/yen as the underlying optimism that a deal will be sealed by the month's end remains intact, even though there's some pessimism that the talks may break down," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
"Such optimism is reflected in the fact that the euro is actually garnering bids against sterling and the Swiss franc. The next focal point is tonight's meeting of European Union leaders and whether governments' top-level participants can reach an agreement." European Union leaders are due in Brussels for a summit later on Thursday.
The New Zealand dollar found relief on bargain hunting, crawling away from five-year lows struck earlier this week on simmering prospects of more interest rate cuts from the central bank there. The kiwi was up 0.5 percent at $0.6923 after striking $0.6815 on Tuesday, its lowest since mid-2010. Its Australian counterpart rose 0.5 percent to $0.7745, comfortably in the middle of this month's $0.7600-$0.7850 range.
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