Forexpros – The U.S. dollar was broadly lower against its major counterparts on Monday, as news of a European Union bailout for Spain designed to support the country’s ailing banking sector boosted demand for riskier assets.
During European morning trade, the dollar was lower against the euro, with EUR/USD climbing 0.70% to hit 1.2603.
European stocks were boosted after Spain’s Finance Minister Luis de Guindos said the EU will grant Spain a loan of up to EUR100 billion that the government will use to recapitalize the country’s ailing banking sector.
The amount sought is about 2.7 times the funds deemed necessary for Spanish banks by the International Monetary Fund in a report released June 8.
Finance ministers from the euro zone welcomed the move, saying the sum “must cover estimated capital requirements with an additional safety margin.”
Also Monday, official data showed that industrial production in France rose far more-than-expected April, jumping 1.5% after a 1% decline the previous month. Analysts had expected industrial production to rise 0.1% in April.
Markets shrugged off official data showing that Chinese inflation, industrial output and retail sales disappointed expectations in May, after unexpectedly strong import data eased concerns over a ‘hard landing’ in the world’s second largest economy.
The greenback was lower against the pound, with GBP/USD rising 0.55% to hit 1.5556.
Elsewhere, the greenback edged up against the yen but was lower against the Swiss franc, with USD/JPY adding 0.09% to hit 79.53 and USD/CHF shedding 0.67% to hit 0.9533.
In Japan, government data showed earlier that an index of manufacturing activity improved less-than-expected in the second quarter, rising to minus 5.7 from a reading of minus 7.3 the previous quarter.
Analysts had expected the index to improve to minus 2.4 in the second quarter.
In addition, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.27% to hit 1.0232, AUD/USD advancing 0.50% to hit 0.9966 and NZD/USD climbing 0.62% to hit 0.7753.
Trading was expected to remain light as markets in Australia were closed for a national holiday.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.53%, to trade at 82.47.
Later in the day, Italy was to announce the details of an auction of government bonds.
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