Investing.com - The U.S. dollar pared losses against its major counterparts on Tuesday, as market sentiment was hit by renewed concerns over the debt crisis in the euro zone, despite strong data from the euro zone, the U.S. and China earlier in the day.
During U.S. morning trade, the dollar was lower against the euro, with EUR/USD rising 0.55% to hit 1.2736, down from a session high of 1.2807.
The euro jumped more than 1% against the greenback earlier, after the ZEW Centre said that its index of German business sentiment recorded its largest ever monthly increase in January, indicating that the euro zone’s largest economy is performing strongly despite the effects of the region’s debt crisis.
A separate report showed that consumer price inflation in the single currency bloc rose less-than-expected in December, advancing 2.7% after a 2.8% rise the previous month, allowing the European Central Bank more leeway to ease monetary policy.
Elsewhere, Spain auctioned EUR4.9 billion of short-term government debt at sharply lower yields earlier, indicating that investor sentiment has not been hit by last week’s sovereign ratings downgrade.
Risk appetite was also boosted after better-than-forecast data on Chinese fourth quarter growth eased concerns over the outlook for global economic growth.
But the single currency remained vulnerable after Standard & Poor’s downgraded the triple-A rating of the euro zone’s bailout fund by one notch on Monday, following Friday’s downgrade of nine euro zone sovereigns, including France.
Meanwhile, talks aimed at negotiating a restructuring of Greece’s debts remained deadlocked, amid disagreements over a bond swap with private creditors.
The greenback was also lower against the pound, with GBP/USD easing up 0.13% to hit 1.5346.
In the U.K., official data showed that the annualized rate of CPI declined to 4.2% in December, from 4.8% the previous month.
The steep decline supported the Bank of England’s view that inflation will fall off sharply in 2012, allowing the bank to ease monetary policy further.
Elsewhere, the greenback was fractionally higher against the yen but remained lower against the Swiss franc, with USD/JPY edging up 0.07% to hit 76.84 and USD/CHF shedding 0.44% to hit 0.9499.
Earlier Tuesday, Bank of Japan Governor Masaaki Shirakawa and Prime Minister Yoshihiko Noda held talks to discuss Europe’s debt crisis, after the euro touched a more than decade low against the yen on Monday, adding to concerns over the impact of the strong yen on Japan’s largely export based economy.
The greenback was also weaker against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.24% to hit 1.0153, AUD/USD adding 0.71% to hit 1.0387 and NZD/USD climbing 0.75% to hit 0.7992.
The Bank of Canada said the outlook for the global economy had “deteriorated” after it left its benchmark interest rate unchanged at 1% earlier.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped 0.36% to hit 81.36.
Also Tuesday, an index of manufacturing conditions in New York improved more-than-expected in January, climbing to the highest level since April.
The Federal Reserve Bank of New York said that its general business conditions index improved by 4.0 points to 13.5 in January from 9.5 in December.
Analysts had expected the index to improve by 1.0 point to 10.5 in January.
During U.S. morning trade, the dollar was lower against the euro, with EUR/USD rising 0.55% to hit 1.2736, down from a session high of 1.2807.
The euro jumped more than 1% against the greenback earlier, after the ZEW Centre said that its index of German business sentiment recorded its largest ever monthly increase in January, indicating that the euro zone’s largest economy is performing strongly despite the effects of the region’s debt crisis.
A separate report showed that consumer price inflation in the single currency bloc rose less-than-expected in December, advancing 2.7% after a 2.8% rise the previous month, allowing the European Central Bank more leeway to ease monetary policy.
Elsewhere, Spain auctioned EUR4.9 billion of short-term government debt at sharply lower yields earlier, indicating that investor sentiment has not been hit by last week’s sovereign ratings downgrade.
Risk appetite was also boosted after better-than-forecast data on Chinese fourth quarter growth eased concerns over the outlook for global economic growth.
But the single currency remained vulnerable after Standard & Poor’s downgraded the triple-A rating of the euro zone’s bailout fund by one notch on Monday, following Friday’s downgrade of nine euro zone sovereigns, including France.
Meanwhile, talks aimed at negotiating a restructuring of Greece’s debts remained deadlocked, amid disagreements over a bond swap with private creditors.
The greenback was also lower against the pound, with GBP/USD easing up 0.13% to hit 1.5346.
In the U.K., official data showed that the annualized rate of CPI declined to 4.2% in December, from 4.8% the previous month.
The steep decline supported the Bank of England’s view that inflation will fall off sharply in 2012, allowing the bank to ease monetary policy further.
Elsewhere, the greenback was fractionally higher against the yen but remained lower against the Swiss franc, with USD/JPY edging up 0.07% to hit 76.84 and USD/CHF shedding 0.44% to hit 0.9499.
Earlier Tuesday, Bank of Japan Governor Masaaki Shirakawa and Prime Minister Yoshihiko Noda held talks to discuss Europe’s debt crisis, after the euro touched a more than decade low against the yen on Monday, adding to concerns over the impact of the strong yen on Japan’s largely export based economy.
The greenback was also weaker against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.24% to hit 1.0153, AUD/USD adding 0.71% to hit 1.0387 and NZD/USD climbing 0.75% to hit 0.7992.
The Bank of Canada said the outlook for the global economy had “deteriorated” after it left its benchmark interest rate unchanged at 1% earlier.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped 0.36% to hit 81.36.
Also Tuesday, an index of manufacturing conditions in New York improved more-than-expected in January, climbing to the highest level since April.
The Federal Reserve Bank of New York said that its general business conditions index improved by 4.0 points to 13.5 in January from 9.5 in December.
Analysts had expected the index to improve by 1.0 point to 10.5 in January.