Dollar flirts with 2007 peak vs yen, consolidates against others

Sheds some ground against the euro amid hopes for Greece deal

The dollar hovered at eight-year highs against the yen early on Thursday, having stopped short of breaking above its 2007 peak as it consolidated recent gains against the euro and other peers.

The greenback popped above 124.00 yen for the first time since June 2007, but lost steam after reaching 124.09, just shy of the 124.14 peak. It last traded at 123.76.

A break above the key level would take the dollar back to highs not seen since December 2002, a move that could prompt more verbal intervention from Japanese officials.

On Wednesday, Japanese policymakers cautioned markets against pushing the yen down too rapidly.

"Longer-term, little stands in the way of further JPY losses," said Greg Moore, senior currency strategist at RBC.

The dollar, however, shed some ground against the euro amid tentative hopes that cash-strapped Greece may be nearing a deal to secure fresh funding.

The euro bounced off a one-month low of $1.0819 to reach $1.0905, snapping a recent string of falls.

The Greek government said on Wednesday it is starting to draft an agreement with its euro zone partners and the International Monetary Fund that would pave the way for aid.

However, European officials have dismissed this as wishful thinking and German Finance Minister Wolfgang Schaeuble said he was surprised by the upbeat tone from some Greek government officials.

Still, the steadier euro saw the dollar index dip to 97.261, from a one-month peak of 97.775.

Among commodity currencies, the New Zealand dollar fared the best after the country's dairy co-operative Fonterra said it expected global demand for dairy products to eventually recover.

The kiwi dollar climbed to $0.7254 , pulling away from a two-month low of $0.7212.

In Asia on Thursday, Australia's capital expenditure data due at 0130 GMT will take centre stage. Investors are keen to see the latest estimate for investment spending for the 2015/16 fiscal year.

Any disappointment from spending plans will no doubt shore up expectations for further interest rate cuts and weaken the Australian dollar, which nudged up from a one-month low of $0.7690 overnight to $0.7729.