The U.S currency rose Tuesday, extending gains, adding to investors' desire of safe havens amid worries over global growth prospects, this time stemming from data in China and concerns about the health of European banks.
Economic News
USD - Dollar Rises on Risk Aversion
The U.S Dollar rose yesterday against its major counterparts on risk aversion as investors worried about the expiration of a key Euro-Zone refinancing program this week.
The Dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was 0.2% higher at 85.817, holding above last week's low around 85.09.
The U.S currency extended gains against the EUR after the Conference Board's consumer confidence index plummeted to 52.9 in June, from a downwardly revised 62.7 in May. Analysts said the EUR/USD pair is likely to remain under pressure until Thursday.
However against Japan's currency which tends to be the biggest beneficiary of safe-haven flows when risk aversion is on the rise the USD fell to the lowest since December. The Dollar declined to 88.50 yen, down from 89.39 on Monday. A drop in U.S. Treasury yields, which makes U.S. debt less attractive to Japanese investors, had also been weighing on dollar/yen cross.
EUR - The EUR Hits Record Low on Swiss Franc
The European currency hit a lifetime low against the Swiss franc and a 3 week trough versus the Japanese yen on Tuesday ahead of a deadline for European banks to repay money to the European Central Bank (ECB). European banks must repay 442 billion euros ($545.5 billion) to the ECB on Thursday, leaving a potential liquidity shortfall in the financial system of over 100 billion euros.
The EUR fell as low as 1.3250 francs, the weakest since its 1999 launch. The 16 -nation currency also dropped 1% vs. Yen to its weakest in three weeks at 108.62 yen. Against the Dollar, the EUR fell 0.4 % on the day to $1.2235 after losing 0.8% on Monday. The EUR also hit a 19-month low against Sterling to 81.14 pence yesterday.
Financial markets will also closely watch debt auctions by France and Spain later this week after tepid demand for Italy's sale of 7 billion euros of government bonds on Monday kept worries about Euro-Zone debt troubles alive. As such the EUR may extend its losses vs.
