Forex - Dollar firms as Europe default fears build

Published 01/24/2012, 09:38 PM
Updated 01/24/2012, 09:42 PM
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Investing.com - Fears that not only will Greece default but will default in a messy manner grew on Wednesday, fueling demand for the greenback in Asian trading.

Earlier on Tuesday, Greece and its private creditors failed anew to agree on terms to restructure the country's debt.

Fresh roadblocks in Greece's debt talks sent the dollar firming against the euro, with EUR/USD dipping 0.07% and trading at 1.3028.

The yen weakened against the dollar after the Bank of Japan said the country won't meet its economic growth forecasts this year.

"The market got off to a bit of a poor footing in terms of the formal rejecting of the Greek private sector investment plans," said Ray Attrill, a senior currency strategist at BNP Paribas SA in New York, according to Bloomberg.

"We did have a spike up in dollar-yen and it looked to be future positioning. The euro has held up better than some of the other higher-beta Group of 10 currencies."

High-beta currencies tend to have the greatest volatility.

Meanwhile, the dollar was stronger against the pound, with Cable falling 0.03% to hit 1.5621.

The greenback was up 0.25% against the yen, with USD/JPY trading at 77.86, and up against the Swiss franc, with USD/CHF rising 0.07% to 0.9282.

The greenback was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD rising 0.13% to 1.0104, AUD/USD up 0.34% at 1.0530 and NZD/USD down 0.10% at 0.8111.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.01% at 80.00.

The Federal Reserve Open Market Committee will unveil its decision on interest rates later Wednesday.

Investors are also awaiting U.K. GDP data and mortgage approvals as well as the Bank of England's meeting minutes.

In the U.S., housing market data, crude oil stockpiles will hit the wire, although the Federal Reserve will serve as the market's chief steering current.   

In other news, the World Economic Forum will take place in Davos, Switzerland.






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