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Dollar hits 3-month highs vs. euro, yen rises on Cyprus fears

By Investing.comForexMar 19, 2013 04:15PM GMT Add a Comment
 
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Investing.com - The dollar hit fresh three-month highs against the euro on Tuesday and fell to session lows against the yen as mounting concerns over the situation in Cyprus bolstered investor demand for safe haven assets.

Dollar hits 3-month highs vs. euro, yen rises on Cyprus fears
During U.S. morning trade, the dollar hit fresh three-month highs against the euro, with EUR/USD down 0.47% to 1.2895.

The euro weakened broadly after Greek newspaper eKathimerini reported that Cyprus’s Finance Minister Michalis Sarris was to step down as speculation mounted that the parliament would reject a bill to impose a tax on bank deposits needed to secure an international bailout.

On Saturday, the European Union and International Monetary Fund reached an agreement on a EUR10 billion bailout for Cyprus. In return, international creditors demanded that bank customers must pay a one-time tax on deposits.

The agreement marked the first time since the onset of the debt crisis that depositors have been forced to take a haircut in return for financial aid.

The dollar fell to session lows against the yen, with USD/JPY falling 0.38% to 94.85.

Investors were looking ahead to the outcome of the Federal Reserve’s policy meeting on Wednesday after data last week showing that U.S. inflation was contained left the way clear for the bank to continue its asset purchase program.

The Bank of Japan was to come under new leadership on Wednesday, amid expectations for more aggressive easing measures at the bank’s next policy meeting in April.

The greenback slipped lower against the pound, with GBP/USD easing up 0.10% to 1.5122.

In the U.K., official data showed that consumer price inflation in the U.K. ticked up to a nine-month high of 2.8% in February, with higher energy prices adding to the cost of living.

The dollar was little changed against the Swiss franc, with USD/CHF dipping 0.05% to 0.9455.

The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD up 0.59% to 1.0276, AUD/USD sliding 0.39% to 1.0359 and NZD/USD losing 0.36% to trade at 0.8526.

The Canadian dollar hit session lows earlier after official data showed that Canadian manufacturing sales fell 0.2% in January, down for a second successive month while wholesale sales rose less-than-expected.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.30% to 83.10.

In the U.S., official data showed that the number of building permits issued increased to the highest level since June 2008 in February, while housing starts rose more-than-expected, underlining the view that the country’s economic recovery is gaining momentum.

The Commerce Department said the number of building permits issued in February rose 4.6% to a seasonally adjusted 0.946 million, above expectations for a 2.3% increase to 0.925 million units.

U.S. housing starts rose by 0.8% last month to a seasonally adjusted 0.917 million, compared to expectations for an increase to 0.915 million.

Investors were looking ahead to the outcome of the Federal Reserve’s policy meeting on Wednesday after data last week showing that U.S. inflation was contained left the way clear for the bank to continue its asset purchase program.




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