The dollar bounced back from four-month lows yesterday, while Greek bond yields jumped on worries the country would not be able to make its debt payments.
Wall Street added slightly to gains, pushing the benchmark S&P 500 to a fresh all-time high.
Oil prices retreated, as supply worries, triggered by advances by Islamic State militants in Iraqi, eased. US Treasuries were weaker.
Greek two-year sovereign bond yields rose nearly 300 bps to just shy of 24 per cent as investors fretted the country would be unable to make a debt repayment to the International Monetary Fund next month.
The country made a May 12 payment to the IMF only by emptying an IMF holding account, and a leaked IMF memo acknowledged Greece had little chance of making a scheduled June 5 payment. Many in the market say the next two weeks will be crucial for the country.
The dollar was last up nearly one per cent at $1.1352 against the euro, which had risen more than eight per cent against the US currency since April 13.
A recent run of softer-than-expected US economic data has encouraged bets that the Federal Reserve will hold off on its first interest rate hikes in nearly a decade, and that has interrupted several months of dollar gains against key world currencies.
Adding fuel to that, Chicago Fed President Charles Evans said Monday that while a rate hike could come as early as June, they should start rising early in 2016. Evans is considered one of the Fed’s most dovish members, generally in favour of looser policy.
Wall Street edged up slightly. The Dow Jones industrial average was up 14.91 points, or 0.08 per cent, at 18,287.47, the S&P 500 added 3.88 points, or 0.18 per cent, at 2,126.61 and the Nasdaq Composite was up 13.95 points, or 0.28 per cent, at 5,062.24.
The MSCI world equity index, which tracks shares in 45 nations, dropped modestly, shedding 0.12 point, or 0.03 per cent, to 442.24.
In Europe, the pan-European FTSEurofirst 300 stocks index was little changed as the market was stung by lackluster energy sector earnings, volatile financial shares and Greece’s precarious finances.
Asian shares had earlier mostly fallen as investors fretted over US data on Friday that suggested growth was slowing in the world’s largest economy. US Treasuries prices fell. Ten-year Treasury yields, which fell after Friday’s data, rose and last stood at 2.2073 per cent, reflecting a price decline of 19/32.
German 10-year yields were steady at 0.65 per cent.
Brent crude was off 42 cents to $66.39 a barrel after Goldman Sachs analysts slashed their 2016-2020 price outlook due to expectations for persistently high supply.
That curbed worries about supply interruptions amid a major advance by Islamic State militants in Iraq and renewed air strikes by a Saudi-led coalition against Houthi militia in Yemen.
US light sweet crude was last off 8 cents at 69.89 a barrel.