source:market watch
NEW YORK (MarketWatch) — The dollar turned lower against the euro Thursday after media reports laid out a plan by European Union leaders to extend loan maturities for Greece and other indebted countries.
The shared currency had come under pressure in earlier trading due to indications that a new Greek rescue package under consideration could result in a selective default on Greece’s sovereign debt.
The euro EURUSD +0.74% turned up to $1.4313, recovering from a low of $1.4137 and up from $1.4230 in late North American trading on Wednesday.
Huge day for the euro
It's EU summit day, the make-or-break moment for Greece — and arguably for the euro too. So far, the market is unimpressed with the details of a possible deal, but it's a fast-moving situation.
The dollar index DXY -0.44% , which tracks the U.S. unit’s performance against a basket of six other currencies, fell to 74.419 from 74.788 Wednesday.
In Asian trading, the euro rose after Germany and France announced they had reached a common position ahead of a closely watched summit called to address sovereign debt in the euro zone.Read about Germany, France agreement on Greece.
It then fell after Luxembourg Prime Minister Jean-Claude Juncker was quoted in news reports saying a “selective default” was still a possibility as a result of the new bailout for Greece.
However, according to a draft plan released in early U.S. trading hours, the euro zone would agree to reduce the interest rate paid by indebted countries on loans from the European Financial Stability Facility, or EFSF. They would also extend loan maturities, according to Dow Jones Newswires. Officials also said the plan would apply to loans given to Ireland and Portugal. Read more on EFSF plan.
A round of much weaker-than-expected data from euro-zone purchasing managers also undercut the euro. RSee more on PMI data.
Against the Japanese yen, the dollar USDJPY -0.11% bought ¥78.77, giving up an earlier gain to sit virtually unchanged from ¥78.76 late Wednesday.
The Japanese currency earlier found support from government data showing Japan swung to a ¥70.737 billion ($897 million) trade surplus in June, beating expectations for another monthly trade deficit in the wake of the March 11 earthquake. Read more on Japan trade surplus.
Also Thursday, the British pound GBPUSD +0.59% rose 0.5% to $1.6246.
The Australian dollar AUDUSD +0.26% changed hands at $1.0768, reversing an earlier loss and versus $1.0745 late Wednesday.
Deborah Levine is a MarketWatch reporter, based in New York.William L. Watts is a reporter for MarketWatch in Frankfurt. Lisa Twaronite in Tokyo contributed to this report.
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