FRX: Dollar holds gains, euro supported ahead of ECB operation
Forexpros - The U.S. dollar remained slightly higher against its major counterparts on Monday, as concerns over the debt crisis in the euro zone sapped demand for higher-yielding assets but the euro remained supported ahead of an expected liquidity injection by the European Central Bank later in the week.
During U.S. morning trade trade, the dollar was higher against the euro, with EUR/USD shedding 0.31% to hit 1.3408.
G-20 finance ministers postponed a decision on increasing the lending capacity of the International Monetary Fund at a weekend meeting and said any decision on outside help will be conditional upon on European governments increasing the size of the region’s debt firewall.
Earlier in the day, German Chancellor Angela Merkel reiterated her opposition to enlarging the lending capacity of the region’s bailout funds beyond the current EUR500 billion limit.
The comments came ahead of a vote in Germany’s parliament on Greece’s second bailout, which was already approved by euro zone finance ministers last week.
But the euro found some support as markets looked ahead to a liquidity boosting operation by the ECB, set to take place on Wednesday, after a similar operation in December eased pressure on peripheral bond markets.
The central bank announced earlier that it had not purchased any euro zone government debt on the secondary bond market for the second consecutive week since it re-launched its bond purchasing program in August.
The greenback was also higher against the pound, with GBP/USD dipping 0.05% to hit 1.5863.
The greenback retreated from a nine-month high against yen but pushed higher against the Swiss franc, with USD/JPY tumbling 0.97% to hit 80.40 and USD/CHF adding 0.25% to hit 0.8980.
Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD dipping 0.07% to hit 0.9987, AUD/USD rising 0.43% to hit 1.0742 and NZD/USD rising 0.33% to hit 0.8386.
In New Zealand, official data showed that the trade balance swung to a deficit of NZD199 million in January, from a surplus of NZD306 million the previous month.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, inched up 0.04% to hit 78.51.
In the U.S., a report by the National Association of Realtors showed that pending home sales climbed to a two-year high last month, increasing by 2%, doubling expectations for a 1% gain and indicating more favorable conditions in the housing market.
