Forexpros – The U.S. dollar was mixed to lower against its major counterparts on Tuesday, as concerns over the sovereign debt crisis in the euro zone persisted ahead of highly anticipated Italian bond auctions later in the week.
During European afternoon trade, the dollar was fractionally lower against the euro, with EUR/USD easing up 0.03% to hit 1.3064, trading close to an eleven-month low.
With markets in the U.K., Canada and Australia remaining closed for an extended holiday break and most investors already away on year-end leave, trading volumes were low, resulting in subdued trade.
The single currency came under pressure as the yield on Italian ten-year bonds rose above the 7% threshold, a level widely considered to be unsustainable, adding to concerns over the handling of the country’s financial troubles.
Meanwhile, Spain’s new government announced negative economic growth in the final quarter of 2011 and the first quarter of the new year, technically putting the country back into recession.
Investors were also cautious after data showed that the use of the European Central Bank’s overnight deposit facility reached a new, all-time high Monday, as euro zone banks increasingly turned to the ECB as a safe-haven for extra funds.
The report added to speculation that the central bank’s three-year loan operation last week did little to strengthen the region’s banking sector.
The greenback was also moderately lower against the pound, with GBP/USD adding 0.08% to hit 1.5645.
Earlier Tuesday, the Telegraph reported that the U.K. is considering plans to restrict the flow of money in and out of the country, in order to protect the economy in the event of a full-blown break-up of the single currency bloc.
The greenback was lower against the yen and the Swiss franc, with USD/JPY retreating 0.12% to hit 77.87 and USD/CHF declining 0.15% to hit 0.9346.
A report showed earlier that Switzerland’s UBS consumption indicator fell for the first time in three months in November, edging down to 0.81 from 0.90 the previous month.
Meanwhile, in the minutes of the Bank of Japan’s latest policy meeting, several policymakers indicated that financial turmoil caused by the euro zone’s debt woes and the yen’s appreciation are increasing risks for growth in Japan.
The greenback was lower against its Canadian counterpart, but higher against its Australian and New Zealand cousins, with USD/CAD edging down 0.13% to hit 1.0190, AUD/USD retreating 0.08% to hit 1.0161 and NZD/USD declining 0.06% to hit 0.7738.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.15%, to hit 80.20.
Later in the day, the U.S. was to publish industry data on house price inflation, as well as a report on consumer confidence and manufacturing activity in Richmond.
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