Global equity markets and the dollar slipped yesterday as investors sought the safety of less risky assets as jitters increased over the likelihood of averting a Greek debt default.
The dollar slid after hitting its highest in more than a week on Tuesday, while yields on US 10-year Treasuries dipped as investors weighed the prospect of higher US interest rates.
But the outlook for the dollar remained upbeat despite its decline yesterday after another round of generally positive data this week. The data supported the view that US rates were likely to rise sooner than later, mostly likely in September.
The Commerce Department said the gross domestic product fell at a 0.2 per cent annual clip in the first quarter, instead of the 0.7 per cent pace of contraction it reported last month.
US Treasuries prices earlier rebounded from a two-day selloff after late-stage debt negotiations between Greece and its international creditors hit a roadblock, crimping optimism for a deal and driving demand for safe-haven bonds.
“We are getting to the point where it’s do or die, take it or leave it, and I think what you're seeing today is that there's growing fear that this thing is not going to come together,” said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago.
The price of benchmark 10-year Treasury notes traded just below break-even, retreating from early gains, to yield 2.4141 per cent.
Lingering optimism for a Greek debt deal limited the price gains and prevented yields from falling below recent ranges.
The dollar fell against the euro, with the single currency up 0.14 per cent at $1.1185. The dollar index was down 0.01 per cent at 95.424.
MSCI’s all-country index, a gauge of stock performance in 46 countries, fell 0.08 per cent, while the pan-European FTSEurofirst 300 index fell 0.16 per cent to 1,580.83.US stocks were mixed.
The Dow Jones industrial average fell 26.09 points, or 0.14 per cent, to 18,117.98. The S&P 500 slid 0.75 points, or 0.04 per cent, to 2,123.45 and the Nasdaq Composite added 1.11 points, or 0.02 per cent, to 5,161.20.
Oil held above $64 a barrel before a US government report expected to show domestic crude inventories fell for an eighth week, a sign that a supply glut is easing.
The industry group American Petroleum Institute (API) on Tuesday reported a drop in US crude stocks, ahead of yesterday’ official data.
Doubts over the likelihood of a deal next week on Iran’s nuclear work also supported prices. Brent crude rose 12 cents to $64.57 a barrel, while US crude gained 26 cents to $61.27 a barrel.