Investing.com - The euro pulled back from six-week lows against the dollar on Thursday after the European Central Bank increased its emergency lending to Greek banks, a day after Greece’s parliament voted to accept harsh austerity measures.
EUR/USD was last at 1.0917, off 0.3% for the day after falling to a six-week trough of 1.0856 earlier.
The ECB increased its emergency lending to Greek banks by €900 million and added that it is operating under the assumption that Greece will remain in the euro zone.
Speaking at a news conference after the bank’s decision to keep euro area interest rates on hold at record lows, ECB President Mario Draghi said several positive things have happened to allow the increase in emergency liquidly assistance.
Greece’s parliament on Wednesday approved stringent reform measures demanded by the country’s creditors in order to secure a new bailout program.
The vote cleared the way for negotiations on a third bailout package to begin, but also raised doubts over the future of Greek Prime Minister Alexis Tsipras' government after many lawmakers in his left-wing Syriza party voted against the deal.
Draghi said it was “hard to predict” when Greek banks will reopen and added that the decision ultimately rested with the Greek government.
Capital controls were imposed on June 29 as the banking system neared insolvency when deposit outflows accelerated after bailout talks collapsed. ATM withdrawals are limited to €60 per day.
The ECB needed to ensure that Greece had temporary financing in place to meet a €3.5 repayment due to the bank on Monday before agreeing to increase emergency funding.
Draghi said it now appeared that Greece would make the repayment and clear its arrears to the International Monetary Fund.
A €7 billion short-term financing package to keep Greece afloat until the new bailout can be finalized has been agreed in principal.
Demand for the dollar continued to be underpinned after a report showed that U.S. jobless claims fell last week, indicating that the labor market is on a solid footing.
The Labor Department said the number of people filing first time claims for unemployment benefits dropped by 15,000 to 281,000 last week.
Analysts had expected initial jobless claims to fall by 10,000 to 285,000 last week.
The upbeat data came one day after Federal Reserve Chair Janet Yellen reiterated that the central bank was on track to raise interest rates by the end of the year if the economy continues to evolve as expected.
USD/JPY was near six-week highs at 123.94, while EUR/JPY was at 135.26, off lows of 134.75.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.25% to 97.53, not far from six week peaks of 97.56 struck earlier in the session.