Forexpros – The U.S. dollar added to gains against its major counterparts on Monday, as uncertainty over whether this week’s European Union summit will result in fresh measures to tackle the euro zone’s debt crisis boosted safe haven demand.
During European afternoon trade, the dollar was higher against the euro, with EUR/USD falling 0.68% to hit 1.2484.
Investor sentiment soured amid growing skepticism over whether European leaders will make any progress towards greater fiscal integration and allowing the bloc’s rescue funds to buy government debt at a summit meeting due to begin on Thursday.
Meanwhile, fears that the debt crisis in the euro area is creating a drag on global growth continued to weigh, following a string of data last Thursday which pointed to weak U.S. manufacturing activity, a shrinking Chinese manufacturing sector and slowing business activity across the single currency bloc.
Earlier Monday, Spain’s government formally requested aid of up to EUR100 billion for its banking sector from its euro zone partners. Spain’s economy minister said the amount should be enough to cover the needs of all banks and provide an additional security buffer.
The request came after the results of an independent audit last week indicated that Madrid would need a rescue package of as much as EUR62 billion to bailout its banks.
The greenback was also up against the pound, with GBP/USD losing 0.21% to hit 1.5551.
Speculation over the possibility of more easing from the Bank of England continued after BoE policymaker David Miles said earlier that a “substantial” amount of monetary stimulus was needed to shore-up growth in Britain’s “stalled” economy.
In an interview with the Financial Times, Miles reiterated his support for a GBP50 billion expansion of the central bank’s asset purchase program.
Elsewhere, the greenback was lower against the traditional safe haven yen, with USD/JPY tumbling 0.72% to hit 79.85, but extended gains against the Swiss franc with USD/CHF climbing 0.65% to hit 0.9614.
The greenback strengthened against its Canadian, Australian and New Zealand counterparts, with USD/CAD gaining 0.47% to hit 1.0294, AUD/USD shedding 0.60% to hit 1.0003 and NZD/USD down 0.56% to hit 0.7858.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.40%, to a two-week high of 82.73.
Later Monday, the U.S. was to release official data on new home sales.
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