Forexpros – The U.S. dollar was sharply higher against its major counterparts on Monday, as investors remained skeptical over whether Friday’s European Union agreement would be enough to resolve the debt crisis in the euro zone.
During U.S. morning trade, the dollar was up against the euro, with EUR/USD tumbling 1.25% to hit 1.3216.
Sentiment on the single currency was hit after Moody’s said it will review the ratings of all EU countries in the first quarter, saying Friday’s summit failed to deliver “decisive policy measures” to end the region’s debt crisis.
EU leaders agreed to draft a new treaty to implement tighter fiscal consolidation across the euro zone and to provide EUR200 billion in loans to the International Monetary Fund to assist countries with debt problems.
But investors remained unsure over whether the measures would go far enough after the European Central Bank indicated that it had no plans to increase its bond purchasing program, capping weekly bond purchases at EUR20 billion.
Earlier Monday, Standard & Poor’s chief European economist said Friday’s agreement was a significant step in resolving a “crisis of confidence,” but warned that time is running out and more action is needed.
The comments came after S&P placed the credit ratings of 15 euro zone members, including France and Germany, on watch for a potential downgrade last week.
The greenback was also higher against the pound, with GBP/USD shedding 0.27% to hit 1.5627.
Elsewhere, the greenback was stronger against the yen and the Swiss franc, with USD/JPY rising 0.32% to hit 77.86, and USD/CHF jumping 1.23% to hit 0.9344.
In Switzerland, official data showed that the number of people employed rose more-than-expected in the third quarter, but for the first time in two years the employment outlook indicator showed a vey slight decline in a year-on-year comparison.
In addition, the greenback was sharply higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD surging 0.94% to hit 1.0264, AUD/USD tumbling 1.45% to hit 1.0069 and NZD/USD plunging 1.65% to hit 0.7625.
Earlier in the day, official data showed that Australia’s trade surplus increased less-than-expected in November. A separate report showed that Australian home loan approvals rose more-than-expected last month.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, jumped 1.17% to hit a two-month high of 80.07.
Also Monday, Italy’s Treasury sold the full targeted amount of EUR7 billion of 12-month government bonds at an average yield of 5.95% compared to 6.08% at a bond auction last month.
Following the auction, the yield on Italian 10-year government bonds climbed back above the critical 7% threshold, to levels widely seen as unsustainable.
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