Forexpros – The U.S. dollar tumbled against its major counterparts in thin trade on Tuesday, as worries over the euro zone’s debt crisis eased while risk appetite was also boosted by better-than-expected U.S. housing data.
During U.S. morning trade, the dollar was down sharply against the euro, with EUR/USD surging 0.89% to hit 1.3115.
Demand for riskier assets was boosted after the U.S. Census Bureau said in a report that U.S. building permits rose to the highest level since March 2010 last month, while U.S. housing starts climbed to a 19-month high.
The upbeat U.S. data came after German research institute Ifo said that its Business Climate Index unexpectedly rose in December, confounding expectations for a decline.
Also Tuesday, Spain saw borrowing costs fall sharply at an auction of three and six-month government bonds, easing concerns over the fiscal health of the region’s fourth-largest economy.
The greenback was also weaker against the pound, with GBP/USD jumping 1.22% to hit 1.5686.
Earlier in the day, a report by the Confederation of British Industry said retail sales unexpectedly rose at the fastest rate in seven months in December, but warned that sales were expected to fall sharply again after Christmas.
The greenback slid against the yen but posted steeper losses against the Swiss franc, with USD/JPY shedding 0.38% to hit 77.73 and USD/CHF dropping 0.98% to hit 0.9279.
In Switzerland, official data showed that the trade surplus widened more-than-expected in November, as exports rose 3.8% year-on-year to CHF17.75 billion. The overall trade surplus was CHF3.00 billion.
In addition, the greenback was sharply lower against its Canadian, Australian and New Zealand cousins, with USD/CAD falling 1.17% to hit 1.0265, AUD/USD moving back over parity, jumping 1.92% to hit 1.0086 and NZD/USD soaring 2.03% to hit 0.7709.
The Canadian dollar shrugged off government data showing that consumer prices rose less-than-expected in November.
Statistics Canada said consumer price inflation rose 0.1% last month, below expectations for a 0.3% gain, bringing the annualized rate of CPI to 2.9%. The core inflation rate rose 2.1% in November on the year.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped 1.06% to hit a more than one-week low of 80.08.
Market sentiment remained fragile as fears over credit ratings downgrades across the euro zone lingered after ratings agency Standard & Poor’s placed 15 euro zone nations on negative ratings watch earlier this month.
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