Forex - Dollar regains ground as euro rally fades

Published 09/26/2011, 11:01 AM
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Investing.com – The U.S. dollar regained ground against most of its major counterparts on Monday, as the euro retreated from the session high in choppy trade, while speculation over easing measures by the European Central Bank continued.

During U.S. morning trade, the greenback was up against the euro, with EUR/USD slipping 0.15% to hit 1.3481.

The single currency strengthened against the greenback earlier, amid speculation that the ECB may ease monetary policy to help the euro zone economy after a senior bank official said that a reduction in interest rates could not be ruled out.

A smaller-than-expected decline in the Ifo index of German business confidence for September also helped market sentiment.

But the greenback was down against the pound, with GBP/USD climbing 0.64% to hit 1.5544.

Earlier in the day, Bank of England policymaker Ben Broadbent said that the pound was likely to remain weak for some time and that the slowdown in global growth would weigh on inflation.

The greenback was also weaker against the yen and the Swiss franc, with USD/JPY shedding 0.24% to hit 76.40 and USD/CHF shedding 0.32% to hit 0.9029.

Elsewhere, the greenback was sharply higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD surging 0.71% to hit 1.0363, AUD/USD falling 0.62% to hit 0.9717 and NZD/USD tumbling 0.90% to hit 0.7687.

Official data released earlier showed that New Zealand's trade balance swung into a deficit of NZD641 million in August, from a downwardly revised surplus of NZD111 million the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, eased up 0.06% to hit 78.97.

Also Monday, official data showed that U.S. new home sales fell 2.3% in August, to hit a six-month low.

The Commerce Department said that new home sales fell to a seasonally adjusted annual rate of 295K in August, from an upwardly revised 302K in July. Analysts had expected new home sales to fall to 293K last month.

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