ST: Dollar broadly higher as euro tumbles on Greece woes
Forexpros – The U.S. dollar extended gains against almost all of its major counterparts on Monday, as mounting concerns over a debt default by Greece spurred a flight to safety by investors.
During U.S. morning trade, the greenback was sharply higher against the euro, with EUR/USD tumbling 1.33% to hit 1.3617.
Over the weekend, European finance ministers warned that Greece may not receive it next tranche of aid, due next month, if the government fails to meet deficit reduction targets. The warning fuelled speculation that a Greek debt default could be imminent.
Later Monday, officials from the European Union and the International Monetary Fund were to hold a teleconference with Greek Finance Minister Evangelos Venizelos to discuss extra steps to ensure Athens can qualify for its next tranche of rescue funds.
Ahead of the talks, Greece’s finance minister said the country will announce the closure of several state-linked organizations this week and make further spending cuts in its 2012 budget.
The greenback was also higher against the pound, with GBP/USD falling 0.91% to hit 1.5646.
Earlier Monday, the Bank of England’s quarterly bulletin said the bond-purchase plan it implemented between March 2009 and early 2010 had an “economically significant” effect on Britain’s financial system, but said the impact of future purchases may differ.
Elsewhere, the greenback was down against the yen but rallied against the Swiss franc, with USD/JPY shedding 0.47% to hit 76.42 and USD/CHF soaring 1.14% to hit 0.8856.
Meanwhile, the greenback was stronger against its Canadian, Australian and New Zealand cousins, with USD/CAD jumping 1.27% to hit 0.9904, AUD/USD falling 1.59% to hit 1.0196 and NZD/USD plummeting 1.12% to hit 0.8197.
Earlier in the day, a report showed that the New Zealand’s Westpac index of consumer sentiment was unchanged at 112 in the September quarter, as consumers remained upbeat, but long term confidence dropped off.
Meanwhile, the Australian dollar was weighed by speculation over a possible rate cut by the country’s central bank, ahead of the release of minutes from this month’s policy-setting meeting on Tuesday.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, jumped 1.08% to hit 77.86.
Also Monday, U.S. President Barack Obama was to outline his plan to reduce the federal budget deficit by more than USD3 trillion over the next 10 years in Washington.
