MW: Dollar rises vs. most rivals; euro consolidates
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar edged higher versus most major rivals, but lost a little ground against the euro as traders turned their attention to politics as Italy prepared for elections later this month and Spain’s ruling party fought corruption allegations.
The ICE dollar index DXY +0.11% , a measure of the U.S. unit against a basket of six major rivals, traded at 80.310 in recent trade, up from 80.234 in North American action late Friday.
The WSJ Dollar Index XX:BUXX +0.25% , which is based on a slightly wider basket, rose 0.20 point to 71.70.
The euro EURUSD +0.0967% fetched $1.3404, up from $1.3365. Versus the yen EURJPY +0.6738% , the shared currency bought ÂĄ125.25 compared to ÂĄ123.93.
Bullish “euphoria” toward the euro faded last week after European Central Bank President Mario Draghi said policy makers would watch the shared currency’s appreciation for signs it was affecting the bank’s inflation outlook and repeatedly emphasized the ECB’s “accommodative” monetary policy, noted strategists at Lloyds Bank in London.
A meeting of euro-zone finance ministers later Monday is expected to focus on prospects for an aid program for Cyprus but appears unlikely to stir much market reaction, they said in a note. However, “there remains plenty of uncertainty surrounding the Italian elections which could further weigh on the euro over the coming weeks,” they wrote.
With the Feb. 24-25 elections now less than 15 days away, polling is banned. The final round of surveys published Friday showed the gap between the leading candidate, center-left politician Pier Luigi Bersani, and former premier Silvio Berluscino stable at around five to seven percentage points, noted Elsa Lignos, currency strategist at RBC Capital Markets.
That would translate into a win in the lower house for Bersani, who is seen as likely to stick with a controversial economic-policy overhaul initiated by technocratic Prime Minister Mario Monti. Bersani could potentially team up with a group of candidates backing Monti.
“Market preferences appear to be Bersani/Monti coalition, followed by outright Bersani, followed by hung parliament,” Lignos said.
Asia offered little fodder for traders, with markets across much of the region closed for holidays.
The dollar bought ÂĄ93.50 USDJPY +0.57% , up from ÂĄ92.75.
Among other major currency pairs, the British pound GBPUSD -0.72% slipped to $1.5688 from $1.5794, while the Australian dollar AUDUSD -0.35% changed hands at $1.0277, down from $1.0317.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Follow him on Twitter @wlwatts.
