FX:Dollar remains broadly lower as markets turn to E.Z. meetings
Forexpros - The U.S. dollar remained broadly lower against its major counterparts on Tuesday, as investors eyed a series of highly anticipated euro zone meetings throughout the week, amid growing hopes for fresh measures to tackle the debt crisis in the euro zone.
During European afternoon trade, the dollar was lower against the euro, with EUR/USD climbing 0.71% to 1.2432.
The euro rose to a 2-week high against the greenback after the U.K.’s Telegraph newspaper said earlier that it could confirm weekend reports that the European Central Bank may set a cap on peripheral euro zone bond yields at its next policy meeting in September.
On Monday, the ECB dismissed the reports, saying it was “misleading” to report on decisions which have not yet been taken.
Speculation over the possibility of ECB intervention saw Spanish borrowing costs fall at an auction of short-term government debt, with Madrid successful auctioning EUR4.5 billion of bills, the top end of the target range.
Investors were also eyeing a series of highly anticipated euro zone meetings later this week, amid hopes that leaders would make some progress on steps to the stem the crisis in the region.
Luxemburg’s Prime Minister Jean-Claude Juncker, who also heads the group of euro zone finance ministers, was to hold talks with Greek Prime Minister Antonis Samaras on Wednesday, to discuss a two-year extension of the country’s economic reform program.
German Chancellor Angela Merkel is to meet with French President Francois Hollande on Thursday, while Antonis Samaras is to meet with the French and German leaders later in the week.
The greenback was also lower against the pound, with GBP/USD rising 0.36% to 1.5766.
In the U.K., official data showed that public sector borrowing rose unexpectedly in July, fuelling concerns over the state of public finances.
The National Statistics Office said that public sector net borrowing posted a surplus of GBP1.8 billion in July, compared to a deficit of GBP12.2 billion in June and disappointing expectations for a surplus of GBP2.5 billion.
Elsewhere, the greenback was steady against the yen, with USD/JPY inching up 0.05% to hit 79.48, but lower against the Swiss franc, with USD/CHF dropping 0.73% to trade at 0.9658.
The greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD slipping 0.23% to 0.9830, AUD/USD climbing 0.50% to 1.0498 and NZD/USD advancing 0.53% to trade at 0.8131.
Earlier in the day, the minutes of the Reserve Bank of Australia’s August policy meeting showed that the bank made no mention of a potential rate cut, seeing as domestic economic growth is overshadowing the “fragile” global outlook.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.55% to 82.06.
Trade looked likely to remain subdued on Tuesday, with no significant economic data releases on the calendar, while volumes were light with many market participants on summer holidays.
