Forexpros – The U.S. dollar remained broadly lower against its major counterparts on Monday, as market sentiment improved, boosted by hopes for a deal to contain the spread of the debt crisis in the euro zone.
During European afternoon trade, the dollar was down against the euro, with EUR/USD rising 0.84% to hit 1.3350.
The euro was boosted by optimism that European Union leaders would be able to reach an agreement on a fiscal pact to halt the spread of the region’s debt crisis ahead of an EU summit early next month.
The pact, if agreed, would make budget discipline legally binding and enforceable by European authorities and would give the European Central Bank more scope to undertake large scale bond purchases.
Earlier Monday, Belgium paid record yields at an auction of government debt but sold the maximum targeted amount of EUR2 billion of bonds in the country’s first debt sale since Standard & Poor’s downgraded the country’s rating by one notch on Friday.
Italian bond yields also eased back after rising to near unsustainable levels last week amid buying by the European Central Bank.
Also Monday, the GfK group said its index of German consumer climate rose unexpectedly for December, as improved employment figures and higher incomes supported the outlook.
The greenback was also lower against the pound, with GBP/USD advancing 0.75% to hit 1.5555.
Elsewhere, the greenback was almost unchanged against the yen but fell sharply against the Swiss franc, with USD/JPY inching up 0.06% to hit 77.77, and USD/CHF tumbling 0.90% to hit 0.9215.
Earlier in the day, the governor of the Bank of Japan warned that the outlook for the country’s economy remained clouded by the ongoing debt crisis in the euro zone and the strong yen, signaling the central bank’s readiness to boost monetary stimulus if necessary.
The greenback was also sharply lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD dropping 1.24% to hit 1.0338, AUD/USD jumping 2.35% to hit 0.9940 and NZD/USD rallying 1.89% to hit 0.7547.
The National Bank of New Zealand said earlier that its index of business confidence rose to 18.3 for November, after a reading at 13.2 the previous month.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.85% to hit 79.14.
Later in the day, the U.S. was to release official data on new home sales.
Forexpros
