Forexpros – The U.S. dollar added to broad gains against its major counterparts on Wednesday, as fears over the ongoing debt crisis in the euro zone saw investors shun riskier assets in favor of the relative safety of the greenback.
During U.S. morning trade, the dollar was sharply higher against the euro, with EUR/USD dropping 1.04% to hit 1.2913.
Sentiment on the single currency was hit after a closely watched auction of German government bonds met with lackluster investor demand and failed to ease investor concerns over borrowing conditions in the euro zone.
Germany sold EUR4.06 billion of 10-year bonds at an average yield of 1.93%, compared with 1.98% at November’s launch of the January 2022 bond, which was one of the worst German debt auctions since the inception of the single currency.
Adding to concerns over the euro zone’s debt woes, bank deposits at the European Central Bank’s overnight facility reached a new all-time high of EUR453 billion on Tuesday, underscoring the unwillingness of European lenders to lend to each other.
Meanwhile, official data showed that the rate of consumer price inflation in the euro zone eased to 2.8% from 3% in December, supporting the view that the ECB could cut rates further to bolster growth.
The greenback was also higher against the pound, with GBP/USD declining 0.29% to hit 1.5603.
In the U.K., a report showed that construction sector activity unexpectedly improved in December, extending the period of sustained expansion to 12 months.
In a separate report, the Bank of England said that net lending to individuals rose in line with expectations in November.
Elsewhere, the greenback inched higher against the yen and but posted strong gains against the Swiss franc, with USD/JPY edging up 0.04% to hit 76.75 and USD/CHF jumping 1.23% to hit 0.9435.
In addition, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.39% to hit 1.0146, AUD/USD shedding 0.53% to hit 1.0321 and NZD/USD losing 0.42% to hit 0.7860.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, advanced 0.75% to hit 80.56.
Also Wednesday, official data showed that U.S. factory orders rose for the first time in three months in November, climbing1.8%, just shy of expectations for a 1.9% gain.
Forexpros
