Forex - U.S. dollar rallies on Greek fears, U.S. economy

Published 01/20/2012, 09:05 AM
Updated 01/20/2012, 09:08 AM
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 Investing.com -  The U.S. dollar rallied against most of its major counterparts Friday, as investors sought safety on Greek debt fears and an improving U.S. economy.   

During early session U.S. trade, the greenback traded higher against the euro, with EUR/USD dropping 0.55% to hit 1.2902.  

The single currency found support after French and Spanish debt auctions met with investor demand and lower yields yesterday  

Yesterday's news that Greece is near a deal with its private creditors which would provide the creditors cash and securities with a market value of approximately 32 cents per euro of government debt, increased the euro zone bullishness earlier in the week.  

However, fresh concerns over Greek debt talks not reaching a speedy resolution triggered U.S. dollar buying this session.  

Lee Hardman, of the Bank of Tokyo Mitsubishi, explained the Greek issue to Bloomberg, "Even if they do reach a deal, the debt levels for Greece will still be unsustainable and further restructuring will be needed."    

In the U.K., a consumer confidence index dropped to 38 in December from 40 the precious month, nearly hitting October's low of 36, the lowest level since 2004.  

The greenback was also higher against the pound, with GBP/USD giving back 0.04% to hit 1.5483.    

Adding to the greenback's appeal, initial U.S. jobless benefit claims plummeted 50,000 to 352,000 in the week ending January, 14th.  This crushed the median analyst's forecast of 384,000, increasing hopes that the world's largest economy continues to improve.  

In addition, purchases of existing U.S. homes climbed 5.2%, yesterday, signaling growth in the housing market.    

Elsewhere, the greenback was higher against the yen but lower against  the Swiss franc with USD/JPY gaining 0.10% to 77.18 and USD/CHF advancing 0.40% to hit 0.9358.    

The greenback was mixed against its Canadian, Australian and New Zealand cousins with USD/CAD gaining  0.42% to hit 1.0151, AUD/USD advancing 0.10% to hit 1.0429 and NZD/USD climbing  0.22% to 0.8054.  

Earlier in the week, an Australian report showed the economy lost 29,300 jobs in December, surprising analysts who expected a 10,000 job gain. However, the unemployment rate held steady at 5.2%  

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, climbed 0.26% to hit 80.49.  

Next week, investors are awaiting the FOMC meeting on Tuesday.






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