Forexpros – The U.S. dollar remained broadly lower against its major counterparts on Monday, amid optimism that European Union leaders may be able to reach an agreement on a deal to halt the spread of the region’s debt crisis.
During U.S. morning trade, the dollar was down against the euro, with EUR/USD rising 0.87% to hit 1.3353.
The euro strengthened broadly earlier amid speculation that EU leaders may be able to reach an agreement on a deal which would make budget discipline enforceable by European authorities and would give the European Central Bank more scope to undertake large scale bond purchases.
Belgium paid record yields at an auction of government debt earlier in the day, but sold the maximum targeted amount of EUR2 billion of bonds in the country’s first debt sale since Standard & Poor’s downgraded the country’s rating by one notch on Friday.
Meanwhile, the Organization for Economic Cooperation and Development said the global economic outlook has deteriorated significantly and urged the ECB to act more decisively to prevent the region’s debt crisis from escalating.
The greenback was also lower against the pound, with GBP/USD advancing 0.69% to hit 1.5546.
The pound trimmed gains after Bank of England Governor Mervyn King said the U.K. economic outlook is significantly weaker than it was three months ago and added that growth looked likely to be flat over the next two quarters as a result of the debt crisis in the euro zone.
Elsewhere, the greenback was higher against the yen but fell against the Swiss franc, with USD/JPY climbing 0.61% to hit 78.19, and USD/CHF tumbling 0.82% to hit 0.9223.
Earlier in the day, the governor of the Bank of Japan warned that the outlook for the country’s economy remained clouded by the ongoing debt crisis in the euro zone and the strong yen, signaling the central bank’s readiness to boost monetary stimulus if necessary.
The greenback was also sharply lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD dropping 1.50% to hit 1.0310, AUD/USD jumping 2.32% to hit 0.9937 and NZD/USD rallying 2.09% to hit 0.7557.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.79% to hit 79.19.
In the U.S., the Commerce Department said earlier that new home sales edged up 1.3% to a seasonally adjusted 307,000-unit annual rate in October, the fastest increase in five months but still short of expectations for an increase to a 312,000-unit annual rate.
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