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Forex - Dollar mixed as markets focus on Italian bond sales

Published 12/27/2011, 10:52 AM
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Investing.com - The U.S. dollar was mixed to lower against its major counterparts on Tuesday, as concerns over the sovereign debt crisis in the euro zone continued to dominate market sentiment ahead of Italian bond auctions programmed on Wednesday.

During U.S. morning trade, the dollar was fractionally lower against the euro, with EUR/USD easing up 0.06% to hit 1.3067.

With markets in the U.K., Canada and Australia remaining closed for an extended holiday break and most investors already away on year-end leave, trading volumes were low, resulting in subdued trade.

The single currency came under pressure earlier as the yield on Italian ten-year bonds rose above the 7% threshold, a level widely considered to be unsustainable.

Italy’s Treasury was to sell EUR9 billion of 179-day bills and EUR2.5 billion of zero-coupon 2013 bonds on Wednesday.

Investors were also wary after data showed that the use of the European Central Bank's overnight deposit facility reached an all-time high on Monday, adding to speculation that the central bank’s three-year loan operation last week did little to strengthen the region’s banking sector.

The greenback was also lower against the pound, with GBP/USD adding 0.19% to hit 1.5662.

Earlier Tuesday, the Telegraph reported that the U.K. is considering plans to restrict the flow of money in and out of the country, in order to protect the economy in the event of a full-blown break-up of the single currency bloc.

The greenback was lower against the yen and the Swiss franc, with USD/JPY retreating 0.19% to hit 77.82 and USD/CHF declining 0.18% to hit 0.9345.

A report showed earlier that Switzerland's UBS consumption indicator fell for the first time in three months in November, edging down to 0.81 from 0.90 the previous month.

Meanwhile, in the minutes of the Bank of Japan’s latest policy meeting, several policymakers indicated that financial turmoil caused by the euro zone’s debt woes and the yen’s appreciation are increasing risks for growth in Japan.

The greenback was moderately lower against its Canadian counterpart, but higher against its Australian and New Zealand cousins, with USD/CAD edging down 0.04% to hit 1.0197, AUD/USD retreating 0.14% to hit 1.0155 and NZD/USD declining 0.30% to hit 0.7721.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.23%, to hit 80.14.

Also Tuesday, data showed that U.S. consumer confidence rose more-than-expected in December, climbing to the highest level since April, while a separate report showed that the U.S. S&P/Case-Shiller home price index fell more-than-expected in October, declining for the 16th consecutive month.


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