Forex - Dollar firms on renewed European cloudiness

Published 01/22/2012, 10:00 PM
Updated 01/22/2012, 10:02 PM
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Investing.com - The dollar strengthened against most major currencies on Monday as market unease with Greece's inability to strike a debt restructuring deal with private creditors over the weekend sparked a dash to the greenback for safety.

The dollar rose against the euro in Asian trading on Monday, with EUR/USD falling 0.23% and trading at 1.2901.

Market observers were hoping Athens had reached a deal to restructure its debts with private creditors by Friday, although negotiations remain ongoing.

Failure to arrive at an agreement may block Athens from tapping fresh bailout money and likely send the country defaulting on a EUR14.4 billion bond redemption coming due on March 20.

Meanwhile in Australia, producer prices in the fourth quarter came in weaker than expected at 0.3% compared with market forecasts for 0.4%, which further fueled dollar demand in Asian trading.

The greenback was up 0.05% against the yen, with USD/JPY was trading at 77.06, and up against the Swiss franc, with USD/CHF rising 0.26% to 0.9370.

The greenback was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD rising 0.12% to 1.0145, AUD/USD down 0.11% to 1.0474 and NZD/USD up 0.01% at 0.8064.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.28% at 80.55.

Later Monday, the Conference Board in will release its Australian leading index, which will shed further light on the health of the economy.

The U.S. Federal Open Market Committee meets Wednesday and even if the monetary policy body doesn't change interest rates, talk ahead of the meeting regarding possible accommodative policies such as a third round of quantitative easing could weaken the dollar and send other currencies rising.

European consumer confidence numbers come out on Monday, while the Bank of Japan will tentatively hold a monetary policy meeting as well.

Later Monday, Canada is to publish its index of leading economic indicators, a good weather vane for the economy over the coming months.





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