Forex - U.S. dollar lower on Greek bailout worries

Investing.com - The U.S. dollar traded lower against its major counterparts Monday, as the approval of the Greek austerity plan raised concerns that it may not be actually implemented to qualify for the euro zone’s economic  bailout package.

During U.S. afternoon trade, the dollar was lower against the euro, with EUR/USD gaining 0.11% to hit 1.3213.
 
The euro found support when Greek Prime Minister, Lucas Papademos obtained parliamentary approval for the spending cuts by a vote of 199 to 74 for the austerity plans.

Euro zone finance ministers are meeting on February, 15 to decide whether or not Greece should be approved for its second economic bailout package.

Germany and European Commission appear pleased with the austerity plans, increasing hopes that the bailout will be approved.

However, Greece needs to make a strong argument how EUR325 million of this year’s total budget cuts will be achieved before the bailout package will be approved.

Greeks are burning buildings and rioting in Athens, protesting the wage, pension and job cuts in the austerity package increasing fears that the plan will not be implemented.

Adding to the negativity, Fitch Ratings reiterated its opinion that Greece will default even if it obtains the bailout funds.

Meanwhile, Italian borrowing costs declined at a debt auction today. Italy’s treasury sold EUR8.5 billion 365 day bills and EUR3.5 billion 127 day bills at lower rates than previous sales.

In German news, the euro zone’s largest economy sold EUR3.01 billion of six month bills at an average yield of 0.0761%, up from a negative yield at a sale held on January 9.

Last week,  the United States saw a surprising decline in the number of first time unemployment claims last week. This solidifies hopes that the economic recovery is continuing in the world’s largest economy.

The greenback was also lower against the pound, with GBP/USD rising 0.17% to hit 1.5782.

Earlier, the Bank of England increased its quantitative easing program by GBP50 billion earlier, citing the "significant margin" of slack in the British economy and left interest rates unchanged at 0.5% in a widely expected decision.

Meanwhile, official data showed that manufacturing production in the U.K. rose significantly more-than-expected in December, increasing for the first time in three months, while industrial production also rose more-than-expected.

A separate report showed that the U.K. goods trade deficit narrowed more-than-expected in January.

The greenback was higher against yen and the Swiss franc, with USD/JPY adding 0.01% to hit 77.67 and USD/CHF surging 0.72% to trade at 0.9184.

In Switzerland a consumer climate index improved slightly more-than-expected in January.

Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.24% to hit 0.9988, AUD/USD adding 0.71% to hit 1.0749 and NZD/USD soaring 1.07% to hit 0.8354.
 
Home loans climbed more than expected in Australia during December, advancing 2.3% after a 1.8% climb the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.12% to hit 79.01.

U.S. President, Barack Obama presented his annual budget, including a USD4 trillion plan to create jobs while reducing the federal budget deficit.