Forexpros – The U.S. dollar added to gains against its major counterparts on Wednesday, as the threat of a Greek default or possible exit from the euro zone amid ongoing political turmoil supported safe haven demand.
During European afternoon trade, the dollar rose to a three-and-a-half month high against the euro, with EUR/USD dropping 0.54% to hit 1.2935.
Concerns over Greece’s future in the single currency bloc mounted after Alexis Tsipras, the head of Greece’s second-biggest party Syriza, said Tuesday that Greece’s financial aid package is null and void and called for a moratorium on Greek debt payments.
Tsipras was to hold talks with Greece’s leading political parties later in the day, as attempts to form a government continue, but a second round of elections is looking increasingly likely.
Earlier Wednesday, the yield on Spanish 10-year bonds rose above 6%, amid investor concerns that the debt crisis could spread from Greece.
Investors also remained concerned over whether French president-elect Francois Hollande’s focus on growth rather than austerity measures as a means to tackle the crisis could spark tensions with Germany.
Concerns over Greece overshadowed official data showing that German exports and imports both hit record highs in March, adding to hopes that the euro zone’s largest economy is weathering the effects of the debt crisis.
The Federal Statistics Office said exports increased by 0.9% to EUR91.8 billion, while imports rose 1.2% to EUR78.1 billion.
The greenback was also higher against the pound, with GBP/USD shedding 0.50% to hit 1.6076.
In the U.K., a report showed that retail sales posted their biggest fall in more than a year in April, as unseasonably wet weather weighed on sales of summer clothing and outdoor goods.
The British Retail Consortium said retail sales tumbled 3.3% year-on-year, following a 1.3% rise in March, confounding expectations for a 0.5% gain.
Elsewhere, the greenback was lower against the safe haven yen but pushed higher against the Swiss franc, with USD/JPY losing 0.38% to hit 79.56 and USD/CHF climbing 0.53% to hit 0.9281.
The greenback was rose to multi-month highs against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.67% to hit 1.0053, AUD/USD tumbling 0.77% to hit 1.0041 and NZD/USD retreating 0.57% to hit 0.7831.
Earlier in the day, Australia’s Prime Minister Julia Gillard said that the government will cut spending for the first time in 42 years, ending four years of budget deficits and giving the central bank flexibility to lower interest rates.
The comments came after official data showed on Tuesday that Australia’s trade deficit more than doubled in March, as commodity exports declined for a third successive month.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.45%, at 80.29.
Later in the day, the U.S. was to produce government data on crude oil stockpiles.
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