Dollar broadly higher vs. rivals, eyes on Greece bailout

Published 02/16/2012, 04:49 AM
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Investing.com - The U.S. dollar was broadly higher against its major counterparts on Thursday, as delays in Greek debt talks and uncertainty over the country’s ability to avoid a sovereign debt default weighed on demand for riskier assets.

During European morning trade, the dollar was higher against the euro, with EUR/USD shedding 0.45% to hit 1.3008.

The euro came under pressure following reports that European Union officials are considering a delay to all or part of Greece's second bailout package until after a general election, which is expected to take place in April.

Officials are examining the possibility of extending a bridging loan to Athens, which would allow Greece to meet EUR14.4 billion in repayments which come due on March 20.

Market sentiment was also hit after ratings agency Moody's warned that it may cut the credit ratings of 114 banks in 16 countries across Europe, citing banks' vulnerability to the sovereign debt crisis in the euro zone.

Meanwhile, the European Central Bank said in its monthly bulletin that it expects the euro zone economy to contract this year by 0.1%, slashing its projections for 0.8% growth. 

The greenback was also higher against the pound, with GBP/USD slipping 0.10% to hit 1.5676.

The Nationwide Building Society said earlier that its index of consumer confidence for the U.K. improved more-than-expected in January, rising to 47 after a reading at 38 the previous month.

Analysts had expected the index to rise to 40 in January.

The greenback was higher against yen and the Swiss franc, with USD/JPY adding 0.45% to hit 78.79 and USD/CHF climbing 0.50%, to hit 0.9282.

The yen remained under pressure after the Bank of Japan unexpectedly announced Tuesday that it would increase the size of its asset-purchase program by JPY10 trillion in an attempt to boost growth and protect the economy from the effects of the strong yen.

Elsewhere, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.36% to hit 1.0037, AUD/USD shedding 0.28% to hit 1.0665 and NZD/USD tumbling 0.85% to hit 0.8261.

Earlier in the day, official data showed that the Australian economy added 46,300 jobs in January, beating expectations for a 10,500 gain, bringing the unemployment rate down 5.1%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.45% to hit 80.11.

The greenback also found support after the minutes of the Federal Reserve’s January policy meeting showed that policymakers were still divided about whether to launch fresh easing measures to shore up growth, but were still actively considering such a move.

Later in the day, the U.S. was to publish official data on building permits and on housing starts, as well as reports on producer price inflation and unemployment claims. Federal Reserve Chairman Ben Bernanke was also due to speak.


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