Forex - Dollar pares losses as Portugal concerns dent risk appetite

Published 01/31/2012, 08:16 AM
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Investing.com - The U.S. dollar trimmed losses against its major counterparts on Tuesday, as concerns over Portugal’s debt burden curbed investor demand for higher-yielding assets.

During European afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.24% to hit 1.3175.

The euro gained ground against the greenback earlier in the session after Greek Prime Minister Lucas Papademos said Monday that negotiators had made "significant progress" in talks aimed at reaching a debt swap plan and aimed to have a definitive agreement by the end of this week.

The euro was also supported after European Union leaders agreed on a fiscal union pact and signed off on the details of a EUR500 billion permanent bailout fund for the euro zone that will come into force in July.

But investors remained wary amid uncertainty over Portugal, as the yield on the country’s 10-year government bonds remained close to Monday’s euro-era highs at 16%, fuelling concerns that Lisbon may also need a debt restructuring deal.

The greenback was also lower against the pound, with GBP/USD rising 0.41% to hit 1.5773.

The pound shrugged off data showing that lending in the U.K. remained subdued in December, rising by GBP0.4 billion, below expectations for GBP1.2 billion increase.

A separate report showed that consumer confidence in the U.K. rose to its highest level in seven months in January.

The greenback pulled back from a three-month low against the yen, with USD/JPY inching up 0.02% to hit 76.35

Earlier in the day, Japanese Finance Minister Jun Azumi reiterated a warning that he will take "decisive steps" if speculators push the yen up too sharply.

The greenback was lower against the Swiss franc, with USD/CHF shedding 0.28% to hit 0.9142.

Elsewhere, the greenback was broadly weaker against its Canadian, Australian and New Zealand cousins, with USD/CAD losing 0.46% to hit 0.9965, AUD/USD rising 0.54% to hit 1.0656 and NZD/USD jumping 1.02% to hit 0.8275.

Earlier Tuesday, a report showed that Australian business confidence edged slightly higher in December, indicating that two successive rate cuts by the country’s central bank have supported a recovery in economic sentiment.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.34% to hit 78.96.

Later in the day, the U.S. was to release industry data on house price inflation, as well as a report on manufacturing activity in the Chicago region. The country was also to publish a report on consumer confidence.


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