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Forex - Dollar mixed vs. rivals in subdued trade

Published 12/27/2011, 04:49 AM
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Investing.com - The U.S. dollar was mixed against its major counterparts on Tuesday, as investors eyed Italian auctions of three and ten-year government bonds later in the week while the threat of mass downgrades in the euro zone continued to linger.

During European morning trade, the dollar was lower against the euro, with EUR/USD rising 0.10% to hit 1.3072, hovering close to an eleven-month low.

With markets in the U.K., Canada and Australia remaining closed for an extended holiday break and most investors already away on year-end leave, trading volumes were low, resulting in subdued trade.

The single currency remained under pressure as the yield on Italian ten-year bonds rose to 7.1% earlier, a level widely seen as unsustainable, renewing fears over the fiscal health of the euro zone’s third largest economy.

Investors were also cautious as ratings agency Standard & Poor’s had yet to announce whether it will cut ratings on any of the 15 euro zone countries it has on credit watch negative.

Two independent European government sources said Friday that S&P was not expected to release its verdict on euro zone debt ratings until January. 

The greenback was moderately lower against the pound, with GBP/USD adding 0.02% to hit 1.5636.

Earlier Tuesday, the Telegraph reported that the U.K. is considering plans to restrict the flow of money in and out of the country, in order to protect the economy in the event of a full-blown break-up of the single currency bloc.

The greenback was lower against the yen and the Swiss franc, with USD/JPY retreating 0.10% to hit 77.89 and USD/CHF easing 0.06% to hit 0.9355.

A report showed that Switzerland's UBS consumption indicator declined in November, falling for the first time in three months, edging down to 0.81 from 0.90 the previous month.

Meanwhile, in the minutes of the Bank of Japan’s latest policy meeting, several policymakers indicated that financial turmoil caused by the euro zone’s debt woes and the yen’s appreciation are increasing risks for growth in Japan.

The greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD edging up 0.08% to hit 1.0212, AUD/USD retreating 0.12% to hit 1.0157 and NZD/USD declining 0.06% to hit 0.7739.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat.

Later in the day, the U.S. was to publish industry data on house price inflation, as well as a report on consumer confidence and manufacturing activity in Richmond.



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