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Forex - Dollar firms as Europe summit reveals policy rifts

Published 05/23/2012, 10:36 PM
Updated 05/23/2012, 10:38 PM
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Investing.com - The dollar rose against major world currencies in Asian trading on Thursday after Germany reportedly reiterated its opposition at a European summit to selling a continent-wide eurobond to help ease Greece of its debt burdens.

Concerns European manufacturing data due out later Thursday could disappoint sent investors snapping up safe-haven dollar positions.
 
In Asian trading on Wednesday, EUR/USD was trading down 0.12% at 1.2669.
Calls for the continent to sell eurobonds are grabbing headlines anew.

Earlier, however, leaders from European paymaster Germany reportedly rejected the idea on the grounds it saddles debt from Greece and other beleaguered countries on healthy countries like Germany.

Critics say eurobonds would also raise interest rates in healthy countries and encourage more spending in the debt-ridden periphery.

Investors also grew increasingly nervous on expectations that France under the leadership of socialist Francois Hollande may butt heads with neighbor Germany over how to navigate the continent out of the crisis going forward.

Both nations harbored similar policy views under France's previous president, Nicolas Sarkozy.

Hollande has said the continent needs to focus more on growth and less on austerity, the latter policy championed by Germany.

Later Thursday, the eurozone will release preliminary data on manufacturing and service sector growth, while Germany and France are also to release individual reports, and currency markets were on edge the numbers may disappoint.

Out of the U.S. bullish news for the dollar hit the wire.

The U.S. Census Bureau said new home sales in April rose by 3.3% to a seasonally adjusted 343,000 units, above expectations for a gain of 2.1% to 335,000.

In the U.K. retail sales fell 2.3% in April, compared to expectations for a 0.8% decline.

Minutes from Bank of England’s May meeting revealed monetary policy authorities wouldn't rule out the need for more monetary stimulus given the U.K. economy's exposure to the European debt crisis.

The greenback was up against the pound, with GBP/USD down 0.04% and trading at 1.5688.

The U.S. currency was up against the yen, with USD/JPY trading up 0.01% at 79.49, and up against the Swiss franc, with USD/CHF trading up 0.07% at 0.9552.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.03% at 1.0256, AUD/USD up 0.02% at 0.9748 and NZD/USD up 0.02% at 0.7502.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.08% at 82.23.

Later Thursday, the U.S. will release data on core durable goods orders and a separate report on initial jobless claims.






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