IV:Dollar trims gains vs. euro as markets eye Cyprus
Investing.com - The U.S. dollar remained sharply higher against the euro on Monday as safe haven demand was bolstered by news that a levy was to be imposed on bank deposit holders as part of a EUR10 billion bailout deal for Cyprus.
During European late morning trade, the dollar was sharply higher against the euro, with EUR/USD down 0.91% to 1.2956, after falling to a three-month low of 1.2882 earlier Monday.
On Saturday, the European Union and International Monetary Fund reached an agreement on a EUR10 billion bailout for Cyprus. In return for the bailout international creditors demanded that all bank customers must pay a one-time tax on deposits.
The agreement marked the first time since the onset of the euro zone debt crisis that depositors have been forced to take a haircut in return for financial aid and triggered a run on cash machines in Cyprus over the weekend.
The euro found some support following reports that the government in Cyprus was preparing a new deposit tax proposal to lessen the impact on smaller depositors.
State media reported that a parliamentary vote on the levy was to be postponed until Tuesday, raising uncertainty over when banks in the country would reopen following a public holiday on Monday.
The dollar pulled away from session lows against the yen, with USD/JPY down 0.34% to 94.98, after falling as low as 94.09 earlier in the trading day.
The dollar was steady against the pound, with GBP/USD inching up 0.08% to 1.5122.
Elsewhere, the dollar gained ground against the Swiss franc, with USD/CHF rising 0.60% to 0.9444.
The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD up 0.40% to 1.0234, AUD/USD sliding 0.28% to 1.0382 and NZD/USD falling 0.47% to 0.8236.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.58% to 82.83.
International creditors are believed to have insisted on the deposit levy because of the large amount of Russian capital kept in Cypriot banks, amid fears of suspected money-laundering.
