U.S. Dollar Trades Mostly Higher

The U.S. dollar is mostly higher Wednesday, but the drivers are elsewhere. Greek talks with the European Union, European Central Bank and International Monetary Fund are beginning, but they look to continue for a couple of weeks. It seems increasingly likely that Greece may have to initiate the backstop facility while these discussions are underway.

Sterling has fully recovered from the erosion seen in North America Tuesday, helped by the better-than-expected jobs report. A most hawkish read of the Reserve Bank of Australia and the Bank of Canada amid a recovery in commodity prices have bolstered the aussie and loonie.

The dollar is holding its own against the yen, but this is more a function of cross-rate developments. Emerging market currencies are generally firm.

Favorable earnings news helped lift Asian equity prices Wednesday. The MSCI Asia-Pacific Index rose 1.1%, with technology and commodity sectors doing particularly well. China's Shanghai Composite rose 1.8%, its best gain this month.

Most bond markets are fairly quiet, allowing the focus to remain in Europe. Greek 10-year yields again briefly pushed through the 8% level and have since eased a bit. New highs in the five-year credit-default swaps were reported. The signs of contagion to Portugal are becoming more clear as Portuguese yields rise above Ireland's. Portugal did have a successful bill auction and the shorter end of the curve, into the two-year, is largely steady Wednesday. Other peripheral bond markets are also under pressure.

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