Forexpros – The dollar strengthened against most major currencies on Monday in wake of European Central Bank President Mario Draghi’s reiterating his opposition to intervening in the European bond markets to ease the crisis there.
Reports from Friday that Fitch Ratings revised the outlook for AAA-rated France and also warned that six other European countries were at risk for downgrades worried markets that Europe’s crisis is far from over, which made the greenback ripe for safe-haven buying.
Out of the U.S., the Federal Reserve recently said that the U.S. economy remains exposed to the European debt crisis but didn’t suggest changes to monetary policy were imminent, thus punting decisions of whether or not to loosen policy to next year.
Furthermore, European Central Bank President Mario Draghi told the Financial Times over the weekend that he wasn’t changing his opinion against intervening in the bond markets and snapping up sovereign debt in order to ease the crisis.
Such a move, known as quantitative easing, could pressure inflation rates upward and go against the central bank’s mandate to ensure price stability.
“The important thing is to restore the trust of the people – citizens as well as investors – in our continent. We won’t achieve that by destroying the credibility of the ECB. This is really, in a sense, the undertone of all our conversation today,” Draghi told the FT.
In early Asian trading on Monday, EUR/USD was down 0.26%, trading at 1.3009.
The greenback was up against the pound, with Cable dropping 0.36% to hit 1.5490.
Meanwhile, the greenback was up 0.18% against the yen, with USD/JPY was trading at 77.91, and up against the Swiss franc, with USD/CHF trading up 0.25% at 0.9384.
The greenback was firmer against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.22% at 1.0405, AUD/USD down 0.67% to 0.9916 and NZD/USD down 0.41% to hit 0.7585.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.27% at 80.91.
Later Monday, European Central Bank President Mario Draghi will be in public again, with markets hanging on every word suggesting any changes to his otherwise hands-off approach to the crisis.
In the U.K., the latest Nationwide Consumer Confidence numbers are due for release as well.
The National Association of Home Builders in the U.S. will release its latest Housing Market Index rates, which measure single-family home sales.
The Reserve Bank of Australia is due to release the minutes of its last monetary policy meeting, which will provide insight into the country’s economic outlook.
In Canada later Monday, the government will release its Wholesale Sales Index, which measures the change in the total value of sales at the wholesale level and is a leading indicator of consumer spending.
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