Forex- Greenback regains lead on Spanish bailout concern

Investing.com - The U.S. dollar eased higher against its major counterparts Monday, as an initial euro relief rally on the back of a bailout for Spanish banks faded amid uncertainty over the details of the deal, while investor focus also shifted to Greece.

During U.S. afternoon trade, the dollar erased losses against the euro, with EUR/USD dipping 0.12% to trade at 1.2503, after falling from a session high of 1.2669.

The euro rallied more than 1% against the greenback earlier after euro zone finance ministers agreed to grant Spain a loan of up to EUR100 billion, which the government will use to recapitalize the country’s ailing banking sector.

But initial optimism faded as details of the Spanish bailout agreement remained unclear, with the amount Madrid will receive to be decided after the results of independent banking audits are published later this month.

Investor sentiment also softened ahead of a Greek general election this weekend, which could determine if the country is to remain on in the euro zone.

The greenback remained lower against the pound, with GBP/USD up 0.17% to hit 1.5498, off an earlier high of 1.5582.

Elsewhere, the greenback dipped lower against the yen, with USD/JPY inching down 0.06% to hit 79.40 and was little changed against the Swiss franc, with USD/CHF easing down 0.01% to hit 0.9594.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.21% to hit 1.0281,AUD/USD up 0.14% to hit 0.9929 and NZD/USD rising 0.37% to hit 0.7731.

The growth linked Aussie and kiwi dollars found support after Sunday’s unexpectedly strong Chinese import and export data eased concerns over a ‘hard landing’ in the world’s second largest economy, following a surprise interest rate by the country’s central bank last week.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, eased higher by 0.05% on the day, to trade at 82.93.

In addition, Monday government data indicated French manufacturing output fell 0.7% in April, while a separate report reflected Italy’s gross domestic product gave back 0.8% in the first quarter, reigniting concerns that economic growth in the euro area is slowing.