Euro Bides Time as Greece Talks Drag On

Sydney: The euro was in a holding pattern early on Friday, having gone nowhere in the past 24 hours as Greece hung in the balance after the latest round of talks failed to clinch a funding deal for the cash-strapped country.

The common currency stood at $1.1205 after drifting in a slim $1.1153-$1.1228 range on Thursday. It was still down 1.3 per cent this week. Against the yen, the euro traded at 138.50, having hit a near one-month low of 137.66.

Euro zone finance ministers ended their third meeting in a week without agreement on Thursday, leaving Greece staring at the prospect of defaulting on a repayment to the International Monetary Fund on Tuesday.

That could trigger a bank run and capital controls, possibly setting Athens on a path out of the euro zone. A so-called Greek exit would create considerable market turbulence, the head of the Swiss National Bank warned, adding the bank would fight a rush to buy already overvalued Swiss francs.

"The focus now turns to the resumption of talks on Saturday morning. What is apparent is that there is a strong political desire to get a deal done," analysts at ANZ wrote in a note to clients.

"Price action overnight suggests the market is still confident that a deal will be struck before the 30 June deadline."

With Greece hogging the headlines once again, U.S. data was relegated to the background. Figures on Thursday showed U.S. consumer spending recorded its largest increase in nearly six years in May, further evidence that economic growth was accelerating in the second quarter.

Markets barely reacted to the data with the dollar index hemmed in a 95.088-95.514 range. It was last at 95.175, little changed on the day.

Against its Japanese counterpart, the greenback was a touch softer at 123.57, off this week's high of 124.38.

The New Zealand dollar was a notable mover this morning with sellers back in play as they put a dovish spin on a central bank report.

In the Reserve Bank of New Zealand's statement of intent for 2015 to 2018, the central bank said it would keep investigating the use of macroprudential tools to control the housing market.

That could leave the central bank room to cut interest rates further if needed, without the fear of fuelling a house price bubble, traders said.

The kiwi slid as far as $0.6864, from just above $0.6900 on the report, but just as quickly erased half of the losses to last stand at $0.6895.