Forex - Greenback lower on Spanish hopes

Investing.com - The U.S. dollar traded broadly lower against its rivals Tuesday, as market sentiment was boosted by hopes that Spain will soon request a bailout which investors hope would help ease the long running debt crisis in the euro zone.

During U.S. afternoon trade, the dollar was lower against the euro, withEUR/USD rising 0.27% to 1.2924.

Sentiment on the euro was boosted after Reuters reported Monday that Spain may be preparing to request a bailout as early as next weekend, but Germany is urging Madrid to wait.

Uncertainty over the timing of a possible bailout request persisted after Spanish media outlets reported earlier that Spain’s Prime Minister Mariano Rajoy told members of his political party that he will not request external financial assistance this weekend.

Ratings agency Moody’s announced earlier that it would release the details of its ratings review on Spain later this month, as it was still assessing several factors, including the draft budget for 2013 and the nature and size of support mechanisms. 

The results of the ratings review had been due to be announced at the end of September.

The greenback was also lower against the pound, with GBP/USD climbing 0.09% to 1.6145.

In the U.K., a report showed that the Markit/CIPS construction purchasing managers' index ticked up to 49.5 last month from a reading of 49.0 in August, but remained below the 50 level which indicates a contraction for the second consecutive month.

The data came after a report by mortgage lender Nationwide said house prices in the U.K. unexpectedly fell by 0.4% in September and are now 1.4% lower than in the same month last year.

Elsewhere, the greenback was fractionally higher against the yen, withUSD/JPY inching up 0.04% to 78.01, but weakened against the Swiss franc, with USD/CHF down 0.39% to 0.9346.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD edging up 0.10% to 0.9833,AUD/USD dropping 0.70% to 1.0288 and NZD/USD climbing 0.35% to hit 0.8304.

Elsewhere Tuesday, the Reserve Bank of Australia cut interest rates to 3.25% from 3.5%, the third rate cut in six months, citing a worsening outlook for the global economy and signs of a weakening local labor market.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.31% to 79.64