Forex - Dollar lower as sentiment improves ahead of EU talks

Published 01/23/2012, 08:05 AM
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Investing.com - The U.S. dollar was lower against most of its major counterparts on Monday, as market sentiment slightly improved amid optimism ahead of a meeting of European finance ministers on the restructuring of Greece’s debt.

During European afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.71% to hit 1.3023.

On Sunday, Greece’s creditors said they had reached their maximum offer for a voluntary debt swop and said it was now up to the EU and the International Monetary Fund to agree on whether they can accept the deal.

The restructuring agreement is a precondition for Athens to receive its next tranche of bailout funds in order to avert a default when a EUR14.4 billion bond redemption comes due on March 20.

Meanwhile, Germany sold EUR2.54 billion of 12-month Treasury bills at an auction which met with strong investor demand at very low yields.

The greenback was higher against the pound, with GBP/USD declining 0.07% to hit 1.5565.

Sterling remained under pressure amid speculation that the Bank of England may announce fresh monetary easing measures as soon as next month to stimulate growth.

The greenback was lower against the yen and the Swiss franc, with USD/JPY retreating 0.13% to hit 76.91 and USD/CHF sliding 0.87% to hit 0.9263.

Markets were also eyeing the release of the Bank of Japan’s monetary policy statement on Tuesday, after Finance Minister Jun Azumi last week indicated readiness to step into the market to counter excess speculation on the yen.

Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.46% to hit 1.0084, AUD/USD rising 0.74% to hit 1.0564 and NZD/USD adding 0.80% to hit 0.8130.

Earlier in the day, official data showed that producer price inflation in Australia rose less-than-expected in the fourth quarter, ticking up 0.3% after a 0.6% rise the previous quarter.

Analysts had expected Australia’s PPI 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, was down 0.54, to hit 79.89.

Also Monday, IMF Managing Director Christine Lagarde said euro zone governments should incorporate the region’s exiting bailout fund, the European Financial Stability Fund into the European Stability Mechanism, increasing the size of the permanent bailout fund, in order to restore investor confidence in the region.


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