Forexpros – The U.S. dollar advanced to multi-month highs against most of its major counterparts on Wednesday, as investors piled into the greenback amid fears over a Greek euro zone exit and rising doubts over the outcome of a European Union summit later in the day.
During U.S. morning trade, the dollar was trading close to a 22-month high against the euro, with EUR/USD falling 0.78% to hit 1.2584.
Investor sentiment was hit by growing doubts that the EU summit would result in fresh measures to stem the euro zone crisis and restore investor confidence in the bloc.
Market participants were concerned about a possible division between France’s new President Francois Hollande, who favors measures designed to support growth and pro-austerity Germany, ahead of the European leaders meeting in Brussels.
The euro came under broad selling pressure earlier after former Greek Prime Minister Lucas Papademos said that Greece had no choice but to stick with a painful austerity program or face a damaging exit from the euro zone, a risk he said was unlikely to materialize but was real.
The greenback was hovering close to a two-month high against the pound, with GBP/USD losing 0.30% to hit 1.5711.
In the U.K., official data showed that retail sales dropped at the sharpest rate since January 2010 in April, falling 2.3%, compared to expectations for a 0.8% decline.
Meanwhile, the minutes of the Bank of England’s May meeting showed that policymakers considered more monetary stimulus, amid concerns over the risk to the U.K. economic recovery arising from the euro zone crisis.
Elsewhere, the greenback was lower against the yen, with USD/JPY tumbling 0.85% to hit 79.27, but posted strong gains against the Swiss franc, with USD/CHF advancing 0.73% to hit 0.9538.
The greenback rose to multi-month highs against its Canadian, Australian and New Zealand counterparts, with USD/CAD climbing 0.64% to hit 1.0270, AUD/USD falling 0.84% to hit 0.9726 and NZD/USD skidding 0.90% to hit 0.7475.
Earlier in the day, official data showed that Canadian retail sales rose by a seasonally adjusted 0.4% in March, in line with expectations, after falling by 0.2% in February.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.42%, to trade at 82.16.
Also Wednesday, U.S. data showed that new home sales rose more-than-expected in April, rebounding from the previous month’s sharp decline.
The U.S. Census Bureau said new home sales rose by 3.3% to a seasonally adjusted 343,000 units, above expectations for a gain of 2.1% to 335,000.
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