Dollar remains broadly lower as markets turn to Brussels meeting

Published 02/20/2012, 08:36 AM
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Investing.com - The U.S. dollar remained broadly lower against its major counterparts on Monday, as hopes that euro zone finance ministers will agree to deliver Greece’s second bailout supported demand for riskier assets.

During European afternoon trade, the dollar was sharply lower against the euro, with EUR/USD climbing 0.96% to hit 1.3265.

Speaking ahead of a meeting of euro zone finance ministers set for later Monday, Greek Finance Minister Evangelos Venizelos said negotiations on the EUR130 billion bailout and a linked debt restructuring deal would continue until the last minute but added that Greece has met all the conditions demanded by its creditors.

“We expect the long period of uncertainty, that benefitted neither the Greek economy nor the euro zone overall, to end today”, Venizelos said.

Sentiment also improved after the German central bank said in its February report that the country’s economy will make a rapid return to growth this year, despite the debt crisis in the euro zone.

The greenback was also lower against the pound, with GBP/USD advancing 0.25% to hit 1.5867.

A report by property website Rightmove showed earlier that average asking prices for houses in the U.K. jumped 4.1% in February, highest monthly increase since April 2002, indicating increasing confidence in the housing market.

The greenback was lower against yen and the Swiss franc, with USD/JPY slipping 0.10% to hit 79.47 and USD/CHF plummeting 1.09%, to hit 0.9099.

The yen came under pressure earlier after official data showed that Japan posted a record JPY1.47 trillion trade deficit in January, fanning concerns that the strong yen is having a negative impact on the country’s largely export driven economy.

Meanwhile, rating agency Standard & Poor's said earlier that the outlook on Japan's AA- sovereign credit rating remained negative and warned that it expected Japan's fiscal flexibility "to continue to diminish."

Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.45% to hit 0.9927, AUD/USD climbing 0.65% to hit 1.0776 and NZD/USD jumping 0.99% to hit 0.8403.

In New Zealand, official data showed that producer price inflation input rose more-than-expected in the fourth quarter, rising 0.5% after a 0.6% increase the previous quarter.

Analysts had expected PPI input to rise 0.4% in the fourth quarter.   

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped 0.67% to hit 78.98.

The greenback also came under pressure after the People’s Bank of China said Saturday that it was to cut the reserve requirement ratios of major commercial lenders in an attempt to boost liquidity and spur growth in the world’s second largest economy.

Trade volumes were expected to remain light on Monday, with markets in the U.S. remaining closed for the Presidents Day holiday.


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