By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — The dollar edged higher in Asian trading hours Tuesday, extending gains made the previous day, when renewed concerns about Europe weighed on currency markets.
The ICE dollar index DXY +0.27% traded at 79.712, up from 79.611 in late North American trading Monday.
The dollar’s Monday advance followed weekend elections in Europe that raised fresh concerns about the austerity aims of the French government and resulted in the defeat of the government that had backed Greece’s latest bailout package.
But European and U.S. stock markets saw some stability in Monday’s session, with two out of three of the main U.S. indexes ending marginally higher after global markets saw a “European-centric risk-relief rally,” according to strategists at Barclays Capital.
They linked the stability in large part to reports that Spanish Prime Minister Mariano Rajoy may be preparing a domestic bank-recapitalization program.
“The outperformance of Spanish equities and the underperformance of Bankia, a large troubled Spanish financial, suggest to us that talks are underway. If concreted, it would bring market relief,” they said.
Still, “short-covering in risk assets ran out of puff in North America, and much of the Asian session was spent drifting modestly lower,” said Sue Trinh, a strategist at RBC Capital Markets.
“Price action was all rather underwhelming,” she said.
The euro EURUSD -0.26% eased to $1.3032, down from $1.3053 in late trading the previous session.
The British pound GBPUSD -0.15% traded at $1.6174, down from $1.6185 on Monday.
The Japanese yen USDJPY +0.04% was little changed, as the dollar bought ÂĄ79.98, up fractionally from ÂĄ79.95 late Monday
The Australian dollar AUDUSD -0.23% declined to $1.0183, down from $1.0207 late Monday, ahead of the Australian federal government’s fiscal budget announcement. Read Australia budget preview
Data out Tuesday showed that Australia posted a wider-than-expected trade deficit for March of A$1.59 billion, up from A$754 million in February. Read more on Australia trade deficit.
Sarah Turner is MarketWatch's bureau chief in Sydney.
