Forexpros – The U.S. dollar added to gains against nearly all of its major counterparts Tuesday, as safe haven demand was fuelled by uncertainty regarding the level of participation in a Greek debt swap deal and concerns over the outlook for the global economy.
During U.S. morning trade, the dollar was higher against the euro, with EUR/USD falling 0.74% to hit 1.3120.
Worries over the threat of a default by Greece increased ahead of the March 8 deadline for the country’s private creditors to sign on to a EUR106 billion debt swap deal, a requirement for Athens to tap a recently approved EUR130 billion bailout fund.
Earlier in the day, Greek finance minister Evangelos Venizelos strongly urged private sector creditors to take part in the debt swap deal and warned that it was the best offer they would receive.
However, only 20% of private Greek creditors have agreed to the swap signaling deeper problems ahead.
Adding to the negative tone, data confirmed that the euro zone’s gross domestic product shrank by a seasonally adjusted 0.3% in the last three months of 2011, in line with expectations and unchanged from a preliminary estimate.
Annualized GDP contracted at a rate of 0.7%, also in line with expectations and unrevised from an initial estimate.
The data increased concerns over the outlook for global growth, coming one day after Chinese Premier Wen Jiabao said his government will target expansion of 7.5% in 2012, the lowest GDP target in eight years.
The greenback was also higher against the pound, with GBP/USD plunging 0.95% to hit 1.5716.
Earlier in the session, a report by mortgage lender Halifax showed that U.K. house prices fell unexpectedly in February after rising in January and continuing the mixed monthly pattern seen over the past year.
The data came after a report by the British Retail Consortium showed that total retail sales rose at an annualized rate of 2.3% in February, after a 2.1% gain the previous month.
The greenback was sharply lower against the yen but advanced against the Swiss franc, with USD/JPY tumbling 0.98% to hit 80.75 and USD/CHF climbing 0.65% to hit 0.9184.
Government data showed earlier that average cash earnings in Japan were unexpectedly flat in January, after a 0.1% rise the previous month.
Meanwhile, the greenback posted strong gains against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.66% to hit 1.0011, AUD/USD falling 1.01% to hit 1.0562 and NZD/USD skidding 1.03% to hit 0.8121.
The Reserve Bank of Australia left its benchmark interest rate unchanged at 4.5% in a widely expected decision earlier, but failed to outrule the possibility of further rate cuts if global economic conditions weaken going forward.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.56% to hit 79.86.
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