Forexpros – The U.S. dollar was trading close to a 16-month high against the euro on Thursday and posted broad gains against its other major counterparts amid fears over sovereign debt issues in the euro zone ahead of a French government debt auction later in the session.
During European morning trade, the dollar was higher against the euro, with EUR/USD falling 0.56% to hit 1.2868.
France planned to auction up to EUR8 billion of 10 to 30-year bonds one day after an auction of German 10-year bonds met with lackluster investor demand.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s amid concerns over the handling of the financial crisis in the euro zone.
Meanwhile, concerns over the health of the beleaguered European banking sector continued to weigh on market sentiment.
The euro was also dented after official data showed that German retail sales dropped unexpectedly in November, declining for the second consecutive month.
The greenback was also higher against the pound, with GBP/USD declining 0.35% to hit 1.5563.
A report earlier showed that service sector activity in the U.K. unexpectedly increased in December.
Elsewhere, the greenback was up against the yen and the Swiss franc, with USD/JPY easing up 0.12% to hit 76.81 and USD/CHF adding 0.54% to hit 0.9466.
The greenback was also stronger against its counterparts in Canada, Australia and New Zealand, with USD/CAD rising 0.38% to hit 1.0166, AUD/USD tumbling 0.85% to hit 1.0279 and NZD/USD losing 0.62% to hit 0.7826.
In Australia, official data showed that the country’s trade surplus contracted unexpectedly in December, declining to a seasonally adjusted AUD1.38 billion, disappointing expectations for a surplus of AUD1.66B.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.44% to hit 80.48.
Later in the day, the U.S. was to release the ADP report on private sector employment as well as data on initial jobless claims and service sector activity.
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