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Forex - Dollar mixed as Merkel remarks weigh on sentiment

Published 11/24/2011, 11:24 AM
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Investing.com - The U.S. dollar was mixed against its major counterparts on Thursday, after comments by German Chancellor Angel Merkel underlined concerns that European leaders would be unable to find a resolution to the debt crisis in the region.

During European late afternoon trade, the dollar edged higher against the euro, with EUR/USD slipping 0.08% to hit 1.3329.

Speaking at a joint news conference with France's Nicolas Sarkozy and Italy's Mario Monti following a meeting earlier, Merkel reiterated her belief that joint euro zone bonds would remove incentives for individual states to improve their fiscal discipline.

Meanwhile, ratings agency Fitch downgraded Portugal’s sovereign rating to junk status, saying it expects gross domestic product to contract by 3% in 2012, making the government's deficit reduction plan far more challenging to execute.

The euro strengthened in early trade after a report showing that German business confidence improved unexpectedly in November, indicating that the euro zone’s largest economy is coping with the region’s debt crisis better than experts had feared.

The greenback was also higher against the pound, with GBP/USD shedding 0.21% to hit 1.5491.

In the U.K., revised data showed that gross domestic product expanded by 0.5% in the third quarter and was up 0.5% on the year, in line with initial estimates earlier this month and with economists' forecasts.

The greenback was weaker against the yen and the Swiss franc, with USD/JPY sliding 0.25% to hit 77.11 and USD/CHF dipping 0.04% to hit 0.9196.

Earlier in the day, Switzerland’s President Micheline Calmy-Rey said the overvaluation of the Swiss franc posed a serious threat to the economy and carried the risk of deflation and added that the Swiss National Bank was committed to “a substantial and lasting weakening of the franc."

Elsewhere, the greenback was broadly lower against its Canadian, Australian and New Zealand cousins, with USD/CAD sliding 0.09% to hit 1.0476, AUD/USD adding 0.45% to hit 0.9733 and NZD/USD climbing 0.24% to hit 0.7418.

In Australia, central bank Governor Glenn Stevens defended the bank's policy decisions over the past year, saying they were the right calls, but said more time is needed to see if he is right.

The Reserve Bank of Australia cut rates in November, despite the country experiencing the biggest commodity price boom in a decade.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.03% to hit 79.27.

Meanwhile, trade looked likely to remain subdued with markets in the U.S. closed for the Thanksgiving holidays.

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