MW: Dollar gains as euro slips on EU summit jitters
By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The dollar index regained Monday some of the ground lost last week, with the euro retreating as European leaders gathered for the first summit meeting of 2012 amid ongoing worries over Greece and the region’s sovereign-debt crisis.
The benchmark DXY +0.69% , which measures the U.S. unit against a basket of six other currencies, stood at 79.274, up from 78.854 late Friday.
The euro EURUSD -0.98% traded at $1.3118, down from $1.3216 in late North American dealings on Friday.
Tensions between Greece and Germany were on the rise ahead of the summit meeting in Brussels, with Greek officials rejecting a proposal by Germany for European Union veto power over Athens’s spending plans. Read about Monday’s EU summit.
A decision by Fitch Ratings late Friday to downgrade five euro-zone countries, including Italy, Spain and Belgium, also added to the risk-off tone in the foreign-exchange market, said Elsa Lignos, currency strategist at RBC Capital Markets.
The dollar index fell 1.7% last week, retreating after the Federal Reserve said that it could keep interest rates at ultra-low levels until late 2014. The U.S. central bank had previously said that rates would stay low until the middle of 2013.
“It is becoming increasingly clear that firmer activity data may still not prevent a further round of quantitative easing and attendant U.S. dollar downside risks,” said strategists at Credit Agricole.
They said they were cautious on the U.S. currency ahead of this week’s raft of economic data.
“This is a big week for U.S. data releases, and in turn, the U.S. dollar. Heavyweight data including January payrolls, ISM manufacturing confidence and consumer confidence readings are on tap over coming days,” they said.
On the other hand, the strategists said that markets will likely look past economic data out of the euro zone.
“Focus instead [is] on the European Union summit beginning today and ongoing Greek debt talks, as well as Italian debt auctions,” they said.
Also Monday, the British pound GBPUSD -0.38% fell to $1.5692, down from $1.5740 North Friday.
Against the Japanese yen USDJPY -0.12% , the dollar bought ÂĄ76.65, down marginally from ÂĄ76.70 in late trading at the end of last week.
