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Forex - Dollar gains on Spanish financial concerns

Published 05/28/2012, 10:35 PM
Updated 05/28/2012, 10:36 PM
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Investing.com - The dollar rose against major world currencies Tuesday, as markets looked beyond hopes that Greece is keen on sticking with the euro and began to fret that Spanish financial concerns will dampen investor demand for risk.

In Asian trading on Tuesday, EUR/USD was trading down 0.10% at 1.2529.

Concerns Spain will come under strain propping up its banking sector clouded out optimism that Greeks want to stick with the euro.

The yield on the Spanish 10-year bond shot to 6.47% earlier, the highest this year, on fears Madrid will struggle to keep the country's banking sector afloat.
 
Spain’s government is set to arrange a EUR19 billion recapitalization plan for one of the country’s largest commercial lenders, Bankia, which weighed down on the euro, as worries persisted that the Spanish government may need to rely on sovereign debt to shore up the financial institution.

Spanish concerns offset growing optimism in Greece, where the conservative New Democracy political party is rising in the polls ahead of June 17 elections.

A strong New Democracy showing could lead to a coalition government that would favor staying in the eurozone.

Still, Spanish debt concerns dowsed appetite for riskier currencies and sent investors back to the dollar.

Meanwhile in Asia, Japan's unemployment rate crept up 4.6% in April from 4.5% in March, slightly worse than expected, as markets were expecting the rate to come in unchanged.

Year-on-year household spending rose 2.6% in April, slightly better than forecasts for a 2.4% gain.

The greenback was up against the pound, with GBP/USD down 0.13% and trading at 1.5661.

The U.S. currency was up against the yen, with USD/JPY trading up 0.08% at 79.53, and up against the Swiss franc, with USD/CHF trading up 0.16% at 0.9600.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.04% at 1.0241, AUD/USD down 0.23% at 0.9830 and NZD/USD down 0.26% at 0.7599.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.05% at 82.38.

Later Tuesday, the U.S. Conference Board's consumer confidence index will hit the wire, while in Europe, German inflation data and Spanish retails sales figures will publish as well.

Markets will keep an eye down the road to Friday's U.S. jobs report.








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