Forexpros – The U.S. dollar added to broad gains against its major counterparts on Wednesday, as concerns that the debt crisis in the euro zone is spreading to core economies weighed on demand for riskier assets and boosted the greenback.
During U.S. morning trade, the dollar was sharply higher against the euro, with EUR/USD tumbling 1.10% to hit 1.3355.
Germany’s Treasury auctioned just EUR3.64 billion of 10-year government bonds with the average yield set at 1.98% in an auction earlier. Total bids for German debt fell short of the maximum amount available by 35%, the worst demand on record.
The auction came after preliminary data showing that the euro zone manufacturing purchasing managers’ index slumped to the lowest level since July 2009 in November, falling to 46.4 from 47.1 in October.
A separate report showed that industrial orders in the euro zone fell significantly more-than-expected in September.
Earlier Wednesday, sentiment on the single currency was hit following reports saying that Belgium and France were in fresh talks over an existing rescue deal for troubled lender Dexia, sparking concerns that France would have to take a larger part in the bailout, which could have implications for the country’s AAA credit rating.
The greenback was also higher against the pound, with GBP/USD falling 0.72% to hit 1.5518.
In the U.K., the minutes of the Bank of England’s November policy meeting showed that policymakers saw little merit in “fine tuning” their stimulus program and voted unanimously to maintain the central bank’s key interest rate at 0.5% and the size of its asset purchase program at GBP275 billion.
Meanwhile, the greenback was stronger against the yen and the Swiss franc, with USD/JPY adding 0.57% to hit 77.41 and USD/CHF rising 0.55% to hit 0.9192.
In addition, the greenback posted strong gains against its Canadian, Australian and New Zealand cousins, with USD/CAD surging 0.70% to hit 1.0455, AUD/USD dropping 1.62% to hit 0.9674 and NZD/USD falling 1.03% to hit 0.7395.
Earlier Wednesday, a report showed that China’s HSBC preliminary manufacturing PMI fell to a 32-month low in November, adding to fears over a ‘hard landing’ in the world’s second largest economy.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rallied 1.03% to hit a two-month high of 79.21.
In the U.S., official data showed that new orders for long-lasting manufactured goods unexpectedly rose in October, but the previous month’s number was revised down sharply.
The Commerce Department said durable goods orders, excluding transportation, rose 0.7% after a downwardly revised 0.6% increase in September. Analysts had expected the number to remain unchanged from the previously reported 1.8% increase.
Overall orders fell 0.7% after declining 1.5% in September.
In a separate report, the Labor Department said number of people who filed for unemployment assistance in the U.S. last week rose unexpectedly, climbing to a seasonally adjusted 393,000, confounding expectations for a decline to 390,000.
Also Wednesday, U.S. data showed that consumer spending edged up 0.1% in October, slowing sharply from a revised 0.7% increase the previous month.
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