Euro hits one-week high vs weaker dollar, as Fed minutes weigh; new hopes for Greek deal emerge

On Thursday the euro hit a one-week high versus the greenback in Asia, as there emerged fresh hopes in the markets that Greece and its creditors can reach a deal preventing the country from exiting the euro bloc.

In the meantime, minutes of the FOMC June meeting put the dollar under pressure.

Today EUR/USD touched 1.1124 during late Asian trade, the pair's highest since July 1; the pair was last at 1.1099, rising 0.18%.

The euro found some support after Greece requested a new three-year bailout from its euro zone creditors and pledged some economic overhauls on Wednesday.

Greece extended capital controls through Monday, and Prime Minister Alexis Tsipras has until midnight Thursday to introduce his European colleagues a plan that includes spending cuts, in exchange for a new European bailout. Failure to get a deal could result in the European Central Bank stopping provision of funds to Greek banks, forcing the country to issue IOUs or some other form of exchange to prevent economic catastrophe.

German Chancellor Angela Merkel said she is willing to let Greece go if Germany doesn’t consider its plans credible, Bloomberg reported referring to people familiar with the matter.

Greece can’t look to the International Monetary Fund for “special treatment” after defaulting, said IMF Managing Director Christine Lagarde.

Markets' reaction to Greece

On Wednesday, the benchmark Euro Stoxx 50 Index rose 1 percent and the euro was little changed - a sign that investors are confident any fallout from Greece won’t spill over to other countries, Bloomberg says.

Portuguese and Italian bonds climbed on optimism Greece would be able to reach a deal, or that the ECB would act to protect other markets.

In Asian trading on Thursday, the MSCI Asia Pacific Index was little changed, approaching the lowest level in almost seven months.

Fed minutes

The minutes of the Fed's June policy meeting signaled that officials need to see more signs of a strengthening U.S. economy before lifting interest rates.

The central bank indicated in its June policy statement that it was on track for at least one and perhaps a second rate increase later this year.

The minutes also indicated worries over Greece's financial problems, signaling that global market turmoil could derail the Fed's rate hike plans if contagion spreads.