Forexpros – The U.S. dollar was broadly higher against its major counterparts on Wednesday, as ongoing concerns over political instability in Italy and Greece fuelled concerns over the debt crisis in the euro zone.
During European morning trade, the dollar was sharply higher against the euro, with EUR/USD tumbling 0.83% to hit 1.3718.
The euro extended losses after a Paris based clearing house hiked the margin call on Italian bonds, fuelling concerns over the country’s fiscal crisis.
The yield on Italian 10-year bonds hovered close to euro-era highs, amid uncertainty over whether Italy’s new government will be able to shore up growth and implement austerity measures, after Prime Minister Silvio Berlusconi announced that he would step down next week.
Meanwhile, Greek officials were still struggling to form a new coalition government.
The greenback was also up against the pound, with GBP/USD shedding 0.43% to hit 1.6019.
Earlier in the day, official data showed that the U.K. trade deficit widened more-than-expected in September, increasing to GBP9.8 billion, compared to a deficit of GBP8.6 billion in August. Economists had expected the goods trade deficit to widen to GBP8.0 billion.
Elsewhere, the greenback was lower against the yen but strengthened against the Swiss franc, with USD/JPY slipping 0.11% to hit 77.63, and USD/CHF climbing 0.59% to hit 0.9000.
The Swiss franc eased after Swiss National Bank Vice Chairman Thomas Jordan said late Tuesday that the recent introduction of the minimum exchange rate of 1.20 per euro was simply an attempt to curb the appreciation of the franc and protect Switzerland’s economy.
Meanwhile, the greenback was sharply higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD surging 0.74% to hit 1.0162, AUD/USD dropping 1.33% to hit 1.0254 and NZD/USD falling 1.27% to hit 0.7880.
In Australia, official data showed that the number of Australian new home loan approvals rose more-than-expected in September, climbing 2.2% and beating expectations for a 1.5% gain.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, surged 0.70% to hit 77.33.
Also Wednesday, government data showed that China’s annualized rate of consumer price inflation came in broadly in line with expectations in October, slowing to 5.5%, after a 6.1% increase the previous month, easing fears over monetary tightening by Beijing.
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