The euro tumbled to a one-month low against the dollar as doubts
over Greece's ability to repay its debts intensified, while Greek
bonds came under renewed pressure.
The common currency fell 0.8% to $1.0885, extending the previous
day's declines as markets fully reopened following the long holiday
weekend.
The moves came after Athens raised doubts over whether it will
have enough money to make payments due to the International
Monetary Fund next month. Further complicating negotiations is the
struggle within the ruling Syriza party over whether to swallow
creditors' tough terms or default.
"Uncertainty around Greece has kept the euro on the back foot,"
said foreign-exchange strategists at Citigroup.
A broad dollar rally helped to peg back the euro, with the buck
touching its highest in nearly eight years against the Japanese
yen. Analysts said a recent improvement in U.S. economic data and
comments from Federal Reserve Chairwoman Janet Yellen that the
central bank is on track to raise interest rates this year were
behind the strength.
Investors were awaiting a raft of U.S. economic data, including
durable goods orders and new home sales, for the latest clues as to
the health of the economy.
In bond markets, Greek two-year yields climbed by 1.3 percentage
point to 23.9% amid growing fears over a default. Safe harbor
German bonds benefited from the unease, with 10-year yields down
0.06 percentage point at 0.55%. Yields fall as prices rise.
Spanish markets remained under pressure after the strong
performance in regional elections at the weekend from two upstart
political parties. Spain's 10-year yield climbed 0.08 percentage
point to 1.85%.
Spain's IBEX 35 stock index was down 0.6%, having fallen 2% on
Monday.
Elsewhere, European stocks were mostly higher. The Stoxx Europe
600 index added 0.3% in early trade. Companies in Europe, which
make a big chunk of their revenue overseas, tend to benefit from a
weaker currency.
In commodities, Brent crude oil fell 0.6% to $65.13 a barrel,
and gold was down 0.8% at $1,195.10 an ounce.
Write to Tommy Stubbington at tommy.stubbington@wsj.com
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