Forexpros – The greenback remained solidly higher against its major counterparts Thursday, amid growing doubts that a European Union summit would yield progress on tackling the region’s debt crisis.
During European trade, the dollar was higher against the euro, with EUR/USD falling% to hit 1.2428.
Hurting single currency bullish sentiment, hopes that European leaders would make headway on dealing with the crisis dimmed after a German government official indicated that the summit would not result in any detailed decisions and warned against high expectations among investors ahead of the conclusion of the summit on Friday.
Earlier in the week, German Chancellor Angel Merkel reiterated her opposition to the idea of joint euro zone bonds, while EU Economic and Monetary Affairs Commissioner Olli Rehn said Wednesday that the summit would focus on short-term measures to stabilize markets and ease pressure on at-risk countries.
Adding to the negative tone, Italy saw long term borrowing costs rose to 6.19%, their highest level since December, following an auction of 10-year bonds, as investor sentiment on the country continued to deteriorate.
Meanwhile, the yield on Spanish 10-year bonds ticked up to 7%, the level that prompted Greece, Ireland and Portugal to seek international bailouts.
The greenback was also higher against the pound, with GBP/USD down 0.47% to hit 1.5498.
In the U.K., official data confirmed that Britain’s economy contracted by 0.3% in the three months to March, but the contraction in the previous quarter was revised up to 0.4%, from a preliminary estimate of 0.3%.
Another report showed that the U.K. current account deficit widened to GBP11.17 billion in the first quarter, from a shortfall of GBP7.22 billion in the fourth quarter.
Economists had expected the current account deficit to widen to GBP9.0 billion.
The weak data reinforced expectations that the Bank of England may implement a third round of quantitative easing measures to shore up growth, possibly as soon as next month.
Elsewhere, the greenback was lower against the yen but higher against the Swiss franc, with USD/JPY declining 0.40% to hit 79.39 and USD/CHF advancing 0.30% to hit 0.9660.
The greenback was up against its Canadian, Australian and New Zealand counterparts, with USD/CAD adding 0.36% to hit 1.0284,AUD/USD shedding 0.23% to hit 1.0057 and NZD/USD slipping 0.18% to hit 0.7902.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies advanced 0.28%, to 83.00.
The greenback was little changed after the U.S. Department of Labor said number of people who filed for unemployment assistance last week fell by 6,000 to a seasonally adjusted 386,000, compared to expectations for a decline of 7,000 to 385,000.
The previous week’s figure was revised up to 392,000 from a previously reported 387,000.
A separate report confirmed that the U.S. economy expanded at an annualized rate of 1.9% during the first quarter, in line with expectations.
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