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Dollar mixed in choppy trade as Greece worries lend support

Published 02/21/2012, 10:48 AM
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Investing.com - The U.S. dollar was mixed against its global counterparts in choppy trade on Tuesday, as uncertainty over whether a second bailout deal for Greece will be enough to resolve the country’s debt crisis weighed on market sentiment.

During U.S. morning trade, the dollar was lower against the euro, with EUR/USD rising 0.17% to hit 1.3264.

The single currency hit a session high against the greenback earlier after euro zone finance ministers agreed the details of a new financial package for Greece, which will reduce the country’s debt to 120.5% of gross domestic product by 2020.

Private-sector creditors also agreed to take a write-down on their bonds of more than 53%, which is expected to cut Greece's debt by EUR107 billion.

But the initial optimism which greeted the announcement of the deal faded amid concerns over Greece’s ability to implement the terms of the package and the country’s deteriorating economic situation.

Meanwhile, the Troika, which is composed of the European Union, European Central Bank and the International Monetary Fund, said in its latest report on Greece's debt sustainability that "additional debt relief" will be required in the future.

The greenback was higher against the pound, with GBP/USD shedding 0.31% to hit 1.5800.

Official data showed earlier that U.K. public finances recorded their largest monthly surplus since January 2008 last month.

Public sector net borrowing or the difference in value between public spending and income swung to a surplus of GBP10.7 billion in January, from a deficit of GBP11.1 billion the previous month.

The greenback was slightly higher against the yen but dipped against the Swiss franc, with USD/JPY adding 0.10% to hit 79.70 and USD/CHF inching down 0.07% to hit 0.9108.

Earlier in the day, official data showed that Switzerland's trade surplus declined unexpectedly in January, falling to CHF1.55 billion from CHF2 billion the previous month as exports fell 3.4% on the month.

Elsewhere, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD gaining 0.23% to hit 0.9957, AUD/USD shedding 0.62% to hit 1.0687 and NZD/USD sliding 0.40% to hit 0.8364.

In Canada, official data showed that retail sales in fell 0.2% in December, broadly in line with expectations.

A separate report, showing that Canadian wholesale sales rose by 0.9% December, beating expectations for a 0.5% gain, offset the impact of the retail sales data.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dipped 0.02% to hit 79.08.

Also Tuesday, Germany’s Finance Minister Wolfgang Schaeuble said that the IMF could contribute as much as EUR23 billion to the Greek rescue package, but added that a final decision would be taken at a meeting next week.

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