Forex: Tuesday’s review

Yesterday the euro rose to the highest in eight weeks against the dollar as Greek officials and creditors worked on the final draft of an agreement on budget and structural measures needed to free up a second aid package. The 17-nation currency strengthened as Prime Minister Lucas Papademos prepared to meet with the European Commission, the European Central Bank and the International Monetary Fund to put the final touches to the document. The euro pared its gains against the dollar after a government spokeswoman said a meeting between Papademos and the leaders of the three parties supporting his government was postponed. Papademos was meeting with Charles Dallara, managing director of the International Institute of Finance, and Deutsche Bank AG Chairman Joseph Ackermann on details of a debt writedown, said the spokeswoman.

The Dollar Index fell to its lowest since December as stocks and commodities erased earlier losses.

The yen fell against all its major counterparts as implied volatility of three-month options for Group of Seven currencies fell to almost a 10-month low, according to the JPMorgan G7 Volatility Index. A decrease makes investments in currencies with higher benchmark lending rates more attractive as the risk in such trades is that market moves will erase profits.

EUR/USD: yesterday the pair rose on one and a half figure.

GBP/USD: yesterday the pair rose on a figure.

USD/JPY: yesterday the pair gain, showed new week’s high.

The US calendar starts at 1200GMT, with the release of the MBA weekly mortgage applications data. There is little else on the agenda

until 1530GMT, when the EIA Wkly Crude Oil Stocks numbers are released. At 1540GMT, San Francisco Federal Reserve Bank President John Williams speaks to the Bishop Ranch Forum on "The Federal Reserve and the Economic Recovery," in San Ramon, Calif. Germany comes to market Weds, with the sale of E4 billion 5-year BOBLs. US issuance is slated for later in the day, with the $32 billion 10-Year Note auction.