Forexpros – The dollar rose against most major global currencies on Tuesday due to growing fears that Spain is coming under increasing pressure to finance itself and is now straining healthier European economies.
In Asian trading on Tuesday, EUR/USD was up 0.07% at 1.2126 but gains came after the pair touched a two-year low earlier.
Earlier, the yield on the Spanish 10-year note approached 7.50%, well above the 7% threshold deemed unsustainable by the markets on fears Spain will find it increasingly harder to finance itself.
Eurozone policymakers recently arranged EUR100 billion in rescue funding for Spain to prop up its banking sector though fears persist the country itself will need a financial lifeline, which sent the euro falling and demand for safe-haven currencies like the dollar rising.
Spanish Economy Minister Luis de Guindos has said that Madrid won’t need a full-scale bailout though markets remained on edge.
Regional governments have asked for financial assistance as well, with the Murcia province joining Valencia as the latest to request financial assistance from Madrid.
Elsewhere in Europe, Moody’s Investors Service slapped negative outlooks on Germany, the Netherlands and Luxembourg, down from stable, on sentiment the three top-rated countries will eventually shoulder more debt burdens in countries like Spain and Italy.
Meanwhile fresh data broke earlier pointing to an increasingly anxious European consumer.
A European Commission index on consumer confidence dropped to -21.6 for July from -19.8 in June.
The index hit its lowest point since August 2009 and came in well below analysts’ forecasts for a -20.0 reading.
The dollar did see some selling on talk a Greek exit from the eurozone isn’t pending.
Reports surfaced over the weekend that the International Monetary Fund was considering abandoning participation in Greek lending facilities over concerns the country will miss debt-reduction targets.
Fund officials, however, will attend talks with Athens and fellow lenders the European Commission and the European Central Bank later Tuesday, which bolstered the euro and other higher-yielding currencies somewhat.
The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.09% at 1.5521.
The dollar was down against the yen, with USD/JPY trading down 0.17% at 78.26, and down against the Swiss franc, with USD/CHF trading down 0.07% at 0.9904.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.05% at 1.0185, AUD/USD up 0.09% at 1.0267 and NZD/USD up 0.23% at 0.7893.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.05% at 83.81.
Later Tuesday, Federal Reserve Chairman Ben Bernanke is due to speak; his comments will be closely watched for clues to the possible future direction of monetary policy.
Forexpros
