Forex- U.S. Dollar sharply lower on Greek optimism, China easing

Investing.com - The U.S. dollar  traded sharply lower against its major counterparts  Monday, as investors awaited the outcome of a meeting of euro zone finance ministers Greek decision and China’s monetary easing

During U.S. afternoon trade, the dollar was sharply lower against the euro, with EUR/USD climbing 0.79% to hit 1.3243.

The single currency found support as euro zone finance ministers met in Brussels increasing expectations that they would approve  a second bailout worth EUR130 billion as well as a concurrent debt restructuring deal for Greece.

Speaking before the meeting, Greek Finance Minister Evangelos Venizelos said “We expect the long period of uncertainty, that benefitted neither the Greek economy nor the euro zone overall, to end today”.

Sentiment on the euro also improved after the German central bank said in its February report that the country’s economy will make a rapid return to growth this year, despite the debt crisis in the euro zone.

The greenback was also lower against the pound, with GBP/USD advancing 0.11% to hit 1.5845.

Earlier in the day, a report by property website Rightmove showed that average asking prices for houses in the U.K. jumped 4.1% in February, highest monthly increase since April 2002, indicating increasing confidence in the housing market.

The greenback was flat against yen and lower against the Swiss franc, with USD/JPY up 0.01%% to hit 79.57 and USD/CHF plummeting 0.91%, to hit 0.9116.

The yen came under pressure earlier after official data showed that Japan posted a record JPY1.47 trillion trade deficit in January, raising concerns that the strong yen is having a negative impact on the country’s  export driven economy.

Meanwhile, rating agency Standard & Poor's said earlier that the outlook on Japan's AA- sovereign credit rating remained negative and warned that it expected Japan's fiscal flexibility "to continue to diminish."

The greenback also came under pressure after the People’s Bank of China said Saturday that it was to cut the reserve requirement ratios of major commercial lenders in an attempt to boost liquidity and spur growth in the world’s second largest economy.

Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.40% to hit 0.9932,AUD/USD climbing 0.42% to hit 1.0751 and NZD/USD advancing 0.85% to hit 0.8392.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped 0.52% to hit 79.10.

Trade volumes were expected to remain light on Monday, with markets in the U.S. remaining closed for the Presidents Day holiday.