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Dollar broadly lower as markets turn to ECB operation

Published 02/28/2012, 08:15 AM
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Investing.com - The U.S. dollar was broadly lower against its major counterparts on Tuesday, as market sentiment improved ahead of a liquidity boosting operation by the European Central Bank.

During European afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.40% to hit 1.3452.

Sentiment on the single currency was buoyed as markets looked ahead to Wednesday's launch of the ECB’s second three-year long-term refinancing operation, after a similar liquidity injection in December averted a credit crunch and eased pressure on peripheral euro zone bond markets.

The euro remained supported following Monday’s announcement by ratings agency Standard & Poor’s that it had cut Greece’s long term credit rating to 'selective default' after the country embarked on a debt swap deal with its private creditors.

Portugal’s finance minister said earlier that the country had passed the third review of its EUR78 billion bailout by the troika, which is composed of the ECB, European Union and International Monetary Fund, and added that the country’s fiscal targets for 2012 would be met in spite of deteriorating economic conditions.

The greenback was also lower against the pound, with GBP/USD adding 0.21% to hit 1.5857.

Earlier Tuesday, the Confederation of British Industry reported that retail sale volumes in the U.K. improved significantly this month, after tumbling to the lowest level since March 2009 in January.

The greenback was steady against the yen and lower against the Swiss franc, with USD/JPY edging down 0.05% to hit 80.56 and USD/CHF slipping 0.41% to hit 0.8956.

In Japan official data showed that retail sales rose unexpectedly in January, climbing 1.9% after a 2.5% rise the previous month, defying expectations for a decline of 0.2%.

Elsewhere, a report showed that Switzerland's UBS consumption indicator eased down slightly in January, but consumer sentiment looks likely to remain robust in the coming months.

A separate report showed that the number of people employed in Switzerland declined less-than-expected in the fourth quarter.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.32% to hit 0.9958, AUD/USD rising 0.16% to hit 1.0775 and NZD/USD sliding 0.24% to hit 0.8389.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.37% to hit 78.34.

Later in the day, the U.S. was to produce official data on durable goods orders, as well as reports on house price inflation and consumer confidence.


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