MW: Dollar gains amid Spain worries, economic data
Spanish bank worries loom over euro
By V. Phani Kumar and Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — The U.S. dollar gained on Tuesday as worries about the Spanish banking sector kept a lid on the euro.
The ICE dollar index DXY -0.03% , which measures the greenback against a basket of six major currencies, advanced to 82.36, compared with 82.228 in North America late on Monday. Last week, the index touched its highest level since 2010. Read about dollar gains last week.
The euro EURUSD +0.01% declined to $1.2528 versus $1.2540 in holiday-thinned U.S. trading on Monday.
The greenback pared its advance after the S&P/Case-Shiller 20-city composite index showed U.S. home prices were unchanged in March. Read about Case-Shiller index.
Forecasts for U.S. economic data have improved in recent weeks, widening the gap in the growth outlook for the U.S. versus Europe, and other major economies. But some say the housing market will continue to be a drag on the U.S. economy, while others predict the bottom has been reached.
With that tepid enthusiasm for U.S. performance, the dollar is very sensitive to any signs expectations won’t be met.
“Prices still have further to fall and while we are closer to the bottom in prices than at any point in recent memory, price declines should still be expected,” said Dan Greenhaus, chief global strategist at BTIG, referring to Tuesday’s housing data.
Still, worries mounted that Spain’s economy isn’t growing enough, threatening to increase bad loans held by Spanish banks and bring the need for an international bailout closer.
“A renewed selloff in Spanish debt, as banking-sector concerns intensify, dented any positive impact from weekend polls in Greece showing more support for pro-bailout parties,” said Mitul Kotecha, head of global foreign exchange strategy at Credit Agricole.
“’Grexit’ fears have by no means been quelled as the reduction in bank deposits continues to show,” Kotecha added. Grexit refers to the feared possibility of Greece’s exit from the euro zone.
Spanish stocks sank again on Tuesday, following losses on Monday. The yield on Spain’s 10-year government bond ES:10YR_ESP -0.50% rose as high as 6.49% during the session.
Among other major currency pairs, the dollar USDJPY -0.03% rose to buy 79.55 Japanese yen from ÂĄ79.46 Monday.
The British pound GBPUSD +0.00% changed hands at $1.5666, compared to $1.5679.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
Deborah Levine is a MarketWatch reporter, based in New York.
