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Dollar rangebound as Italy concerns hit sentiment

Published 12/10/2012, 11:27 AM
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Investing.com - The U.S. dollar was almost unchanged against the euro and slipped lower against the yen on Monday, as renewed concerns over the debt crisis in the euro zone enhanced safe haven demand.

During U.S. morning trade, the dollar was almost unchanged against the euro, with EUR/USD dipping 0.02% to 1.2924.

Sentiment on the single currency was hit by fears that political instability in Italy will hamper the country’s efforts to emerge from the debt crisis in the euro zone.

On Saturday, Italian Prime Minister Mario Monti announced that he will resign as soon as he has passed the 2013 budget, after members of former Prime Minister Silvio Berlusconi’s party withdrew their support for the government.

The greenback was slightly lower against the pound, with GBP/USD easing up 0.16% to 1.6068.

The greenback slipped lower against the yen and the Swiss franc, with USD/JPY dipping 0.10% to 82.41 and USD/CHF down 0.17% to 0.9332.

The yen was little changed earlier after revised data showed that the Japanese economy contracted by 0.9% in the three months to September, unchanged from the preliminary estimate, while the contraction in the previous quarter was revised to 0.1%.

The greenback slid lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD losing 0.15% to trade at 0.9871, AUD/USD inching up 0.05% to 1.0492 and NZD/USD climbing 0.22% to 0.8342.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dipped 0.07% to 80.53.

The dollar remained supported after Friday’s stronger-than-forecast U.S. jobs data, but expectations that the Federal Reserve will continue to pursue monetary easing at this week’s policy setting meeting remained intact.

Market participants also remained cautious as talks aimed at avoiding the U.S. fiscal cliff continued in Washington, amid concerns that the automatic tax hikes and spending cuts due to take effect in early 2013 could derail the U.S. recovery.



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