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Forex - Dollar broadly higher as debt woes punish euro

Published 07/11/2011, 08:09 AM
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Investing.com – The U.S. dollar remained broadly higher against all of its major counterparts on Monday, while safe haven demand also boosted the yen and the Swiss franc as European Union officials prepared to meet amid fears over sovereign debt contagion in the euro zone.

During European afternoon trade, the greenback was sharply higher against the euro, with EUR/USD tumbling 1.42% to hit 1.4059.

Senior EU officials, including European Central Bank President Jean-Claude Trichet and EU economy commissioner Olli Rehn were meeting to discuss a second bailout package for Greece and assess the risk of the sovereign debt crisis spreading from Greece to Italy.

The single currency was further weighed by speculation that euro zone officials could accept a selective Greek default, following a report in the Financial Times on Sunday.

The greenback was also up against the pound, with GBP/USD shedding 0.66% to hit 1.5951.

But the greenback gave up early gains against the yen and the Swiss franc, with USD/JPY slipping 0.11% to hit 80.54 and USD/CHF sliding 0.10% to hit 0.8355.

Elsewhere, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD climbing 0.68% to hit 0.9688, AUD/USD falling 0.75% to hit 1.0673 and NZD/USD shedding 0.62% to hit 0.8325.

Earlier in the day, official data showed that Australian home-loan approvals rose slightly less-than-expected in May.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, jumped 1.08%.

Risk sentiment was also dented after data on Friday showed that U.S. nonfarm payrolls rose by just 18,000 in June, far below the 89,000 increase forecast by economists, with employers hiring the fewest workers in nine months.

The unemployment rate unexpectedly rose to 9.2%, the highest level in six months.

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