By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — The dollar added to its recent gains Monday, with concerns over Europe’s finances still dominating markets and turning investors away from riskier currencies.
The ICE dollar index DXY +0.25% , which measures the greenback against a basket of six other currencies, traded at 80.116 in Asian trading hours, up from 79.828 in late North American trading on Friday.
The dollar — perceived as a safe-haven currency which tends to appreciate when uncertainty rises — had gained Friday after a weak reading on Chinese economic growth was followed by Spanish bond yields rising to their highest level in months.
Yields on Spain’s 10-year debt rose back to 5.95% Friday, their highest since November, after data showed Spanish banks significantly increased borrowing from the European Central Bank in March.
“Pressure on risk assets has intensified in the wake of softer Chinese GDP data and, especially, renewed euro-zone stresses, with Spain moving rapidly into the spotlight,” said strategists at Credit Agricole.
“Renewed worries about Spain’s fiscal/debt position, as well as opposition to reforms in Italy, threaten to keep the euro restrained,” Credit Agricole said.
The euro EURUSD -0.34% traded at $1.3021 Monday, down from $1.3086 in late North American trading on Friday.
The British pound GBPUSD -0.16% slipped to $1.5824 from $1.5861 Friday .
The Australian dollar AUDUSD -0.46% traded at $1.0322, edging down from $1.0372 at the end of last week.
However, the dollar USDJPY -0.29% weakened against the Japanese yen, buying ÂĄ80.87, down from ÂĄ80.99 late Friday.
Meanwhile, Monday marked the first day in which the People’s Bank of China widened the daily trading band for the yuan, allowing the dollar to move 1% in either direction from a daily midpoint set by the central bank. Previously, the dollar was limited to a maximum move of 0.5% from the midpoint.
While some analysts had tipped further gains for the yuan as the trading band widened, the central bank raised the midpoint Monday — at 6.2960 yuan, up from 6.2879 yuan Friday — tilting the Chinese currency’s value lower.
The higher dollar-yuan parity level, as well as the pair’s trading in the spot market, came against the backdrop of broad gains for the greenback. Read more on yuan-trading band reform
Sarah Turner is MarketWatch's bureau chief in Sydney.
