MW: Dollar turns down after ECB eases collateral rules
By Deborah Levine and Sarah Turner, MarketWatch
NEW YORK (MarketWatch) — The dollar turned down on Friday, giving back some of its steep gains registered in the previous session, after the European Central Bank took a step seen as easing funding stresses for the region’s banks.
The dollar index DXY -0.10% , which measures the greenback against a basket of six currencies, turned down to 82.279, from 82.353 late Thursday.
The euro EURUSD +0.19% turned up to $1.2560, compared with $1.2546 in late North American trading on Thursday.
The ECB widened access to some of its funding operations by saying it would soon accept a wider range of collateral for loans, including lower rated securities and some asset-backed debt secured by car loans as well as consumer and commercial mortgages.
Investors and analysts have said the ECB needs to play a bigger role in addressing the European debt crisis, especially the banking side.
RBC Capital Markets expect the central bank to lower interest rates by a half-percentage point at its July meeting.
The dollar was up earlier after sentiment came under pressure from , Germany’s closely watched Ifo index of business confidence, which hit a two-year low in June. Read about German data,.
Little came out of a meeting of euro-zone finance ministers on Thursday, so attention swung to a gathering of the leaders of France, Germany, Italy and Spain ahead of the June 28-29 European Union summit.
“The details that emerged from the Eurogroup meeting remain short-term bandaids that are unlikely to address the root of the euro zone’s troubles,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
“Ahead of next week’s summit, expectations for the outcome of the meeting were low, but we still suspect that concrete measures are unlikely to emerge at next week’s summit either,” he said. “The result is that the euro and other foreign currencies are likely to reverse their recent gains against the dollar in the very near term.”
On Thursday, the dollar jumped as lackluster U.S. economic data weighed on riskier assets. Read about dollar, U.S. data..
For the week, the dollar index has gained about 0.8% and the euro lost 0.9% versus the U.S. unit.
Also Friday, the British pound GBPUSD -0.01% traded at $1.5587, compared with $1.5596 seen late in the previous session.
Against the Japanese yen, the dollar USDJPY +0.16% rose to buy ÂĄ80.36 from ÂĄ80.28.
Deborah Levine is a MarketWatch reporter, based in New York.
Sarah Turner is MarketWatch's bureau chief in Sydney.
