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Dollar broadly higher as Spain concerns punish euro

Published Oct 23, 2012 11:54AM ET
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Investing.com - The U.S. dollar was broadly higher against the other major currencies on Tuesday, as market sentiment was hit by ongoing uncertainty over the fiscal and economic outlook for Spain, while disappointing U.S. corporate earnings also weighed.

During U.S. morning trade, the dollar rose to a one-week high against the euro, with EUR/USD falling 0.70% to 1.2967.

The single currency came under pressure after a downgrade of Catalonia and four other Spanish regions by ratings agency Moody’s added to uncertainty over when Madrid may formally request a bailout.

Investors remained cautious ahead of euro zone manufacturing and service sector data slated for release on Wednesday, as well as a closely watched report on German business sentiment, amid ongoing concerns over prospects for growth in the bloc.

Market participants were also looking ahead to Wednesday’s conclusion of the Federal Reserve’s first policy meeting since the central bank announced a third round of quantitative easing in September.

The greenback climbed to a six week high against the pound, with GBP/USD down 0.52% to 1.5929.

Elsewhere, the greenback slipped lower against the yen, with USD/JPY sliding 0.20% to 79.78, but gained ground against the Swiss franc, with USD/CHF advancing 0.69% to 0.9332.

The yen found support after Japan’s Finance Minister Koriki Jojima denied a report saying that the government has asked the Bank of Japan to boost its asset-buying program by JPY20 trillion, but he indicated that he would favor further monetary easing by the central bank.

The greenback was broadly higher against the Canadian, Australian and New Zealand dollars, with USD/CAD rising 0.13% to 0.9934, AUD/USD falling 0.74% to 1.0243 and NZD/USD dropping 0.80% to 0.8110.

The Bank of Canada left its benchmark interest rate unchanged at 1.00% earlier and indicated that while policymakers believe rate hikes may still be required they are unlikely to come in the near future.

Separately, official data showed that Canadian retail sales rose 0.3% in August, disappointing expectations for a 0.4% increase, after a 0.7% gain in July.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.53% to 80.09.

Also Tuesday, talks between Greek coalition leaders on the EUR13.5 billion in austerity cuts demanded by the Troika continued in Athens ahead of the November 12 deadline for euro zone finance ministers to decide whether Greece should get its next tranche of aid.



Dollar broadly higher as Spain concerns punish euro
 

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