Dollar rangebound amid Spain uncertainty, U.S. data ahead

Published 10/03/2012, 05:31 AM
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Investing.com - The U.S. dollar was trading in a narrow range against the other major currencies on Wednesday, as uncertainty over the timing of a Spanish bailout and weak global services data weighed on sentiment, ahead of the release of U.S. data later in the day.

During European morning trade, the dollar was slightly lower against the euro, with EUR/USD edging up 0.08% to 1.2931.

Sentiment on the single currency remained fragile after Spanish Prime Minister Mariano Rajoy ruled out a bailout request before this weekend, despite ongoing speculation that Madrid was moving closer to requesting external financial aid.

The euro found some support after official data showed that retail sales in the bloc rose 0.1% in August, compared to expectations for a 0.1% decline.

A separate report showed that the final euro zone service purchasing managers’ index came in at 46.1 in September, well below the 50 level which separates contraction from expansion.

The greenback was marginally higher against the pound, with GBP/USD dipping 0.06% to 1.6123.

The pound remained under pressure after the Markit/CIPS U.K. services PMI fell to 52.2 in September from 53.7 in August, against expectations for a reading of 53.1.

The report said that the U.K. service sector shed jobs for the first time in 10 months in September, fuelling concerns over the economic outlook.

Elsewhere, the greenback was fractionally higher against the yen, with USD/JPY inching up 0.09% to 78.21, but edged lower against the Swiss franc, with USD/CHF dipping 0.06% to 0.9357.

The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.20% to 0.9860, AUD/USD down 0.42% to 1.0223 and NZD/USD falling 0.69% to 0.8215.

Earlier Wednesday, official data showed that Australia posted the largest trade deficit in three-and-a-half years in August as export demand slowed, one day after the country’s central bank cut interest rates for the third time in six months.

Meanwhile, official data showed that growth in China’s service sector moderated in September, underlining concerns over a slowdown in the world’s second largest economy.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged down 0.03% to 79.81.

Later in the day, the U.S. was to produce a report on ADP nonfarm payrolls, while the Institute of Supply Management was to produce data on U.S. service sector activity.


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