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Forex - Dollar drops as IMF, EU strike debt deal accord for Greece

Published 11/26/2012, 09:55 PM
Updated 11/26/2012, 09:57 PM
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Investing.com - The dollar weakened against the world's major global currencies on Tuesday after IMF and EU policymakers agreed to a debt-reduction plan for Greece, which opened the door for aid to resume flowing into the country.

In Asian trading on Tuesday, EUR/USD was up 0.09% at 1.2984.

Greece is set to avoid default.

Greece's EU and IMF creditors agreed to reduce the country's debt-reduction target by EUR40 billion to 124% of gross domestic product by 2020, an accord needed to free up aid.

Furthermore, Greece will cut debt burdens down further to 110% by 2022, while EU and IMF policymakers agreed to trim interest rates on Greek loans, extend their maturity by 15-30 years, and grant the country a 10-year interest repayment deferral.

The news sent the euro rising and the dollar falling, which sparked demand for risk that sent higher-yielding currencies gaining against the greenback.

Elsewhere, separatist parties in Spain’s Catalonia region won the majority of the public vote in elections held over the weekend, which tempered the euro's rally albeit slightly.

Catalonia accounts for nearly a fifth of Spain's economic activity and provides the most tax revenue to the central government.

Elsewhere, the Gfk research group reported that its German consumer climate index fell to 5.9 in November from 6.1 in October, whose figure was revised down from 6.3.

Analysts had expected the figure to hit 6.2 this month.

Meanwhile, the greenback was down against the pound, with GBP/USD trading up 0.07% at 1.6038.

The dollar was down against the yen, with USD/JPY trading down 0.08% at 82.01 and down against the Swiss franc, with USD/CHF trading down 0.02% at 0.9276.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD trading down 0.08% at 0.9927,  AUD/USD up 0.16% at 1.0482 and NZD/USD trading up 0.10% at 0.8227.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.10% at 80.13.

Later Tuesday, the U.S. is to release official data on durable goods orders, a leading indicator of production, as well as industry data on house price inflation.

In addition, the Conference Board is to publish data on U.S. consumer confidence, while Federal Reserve Chairman Ben Bernanke is to deliver brief remarks at the National College Fed Challenge Finals, in Washington D.C.








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