Forexpros – The U.S. dollar was up against all of its major counterparts on Wednesday, after an auction of German government debt met with lackluster investor demand, while concerns over the European banking sector also bolstered safe haven demand.
During European afternoon trade, the dollar was higher against the euro, with EUR/USD falling 0.70% to hit 1.2957.
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 0.39% to hit 1.5587.
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 was unchanged against the yen and but sharply higher against the Swiss franc, with USD/JPY trading at 76.72 and USD/CHF jumping 0.93% to hit 0.9407.
In addition, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.38% to hit 1.0145, AUD/USD shedding 0.46% to hit 1.0328 and NZD/USD losing 0.25% to hit 0.7874.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.49% to hit 80.35.
Later in the day, the U.S. was to release data on factory orders.
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