By William L. Watts and Virginia Harrison, MarketWatch
FRANKFURT (MarketWatch) — The dollar strengthened against the euro and other major rivals Monday as investors shied away from risky assets amid low hopes for any major initiatives to address the euro-zone debt crisis when European Union leaders meet later this week.
The dollar index DXY +0.48% , which measures the greenback against a basket of six currencies, rose to 82.580 from 82.267 in late North American trading on Friday.
The euro EURUSD -0.5426% slipped to $1.2484 from $1.2564 in late North American trading on Friday.
The British pound GBPUSD -0.1566% traded at $1.5551 versus the dollar, down from $1.5575.
A two-day summit of European leaders kicks off Thursday, with attempts to strengthen fiscal integration within the region expected to dominate focus.
“Should we expect too much from the leaders meeting? Other than warm words about consolidation and initiatives which may sound substantive but are likely to be modest, we maintain a skeptical outlook,” said Jeremy Stretch, currency strategist at CIBC in London, in a note.
“Talk of an EU banking union may sound good, but we can expect little detail, not least as though in reality any such measures would require substantial and lengthy legislation. Also any talk of deepening economic ties remains some way from a fiscal union, which is a necessary constituent for closing out the structural impediments as regards a successful monetary union,” Stretch said.
The European Central Bank on Friday moved to improve access to some of its funding operations by saying it would soon accept a wider range of collateral for loans.
Against the Japanese yen, the dollar USDJPY -0.7640% bought ÂĄ79.83, down from ÂĄ80.46 in late North American trading on Friday.
The Australian dollar failed to hold parity above the U.S. dollar AUDUSD -0.5003% AUDUSD -0.5003% , recently trading at 99.96 U.S. cents, a 0.4% decline.
AUDUSD -0.5003% Still, Tim Waterer, senior trader at CMC Markets in Sydney, said the continued strength of the risk-tied currency was threatened by lingering concerns about global growth, following a raft of soft manufacturing data released last week.
“One factor perhaps keeping the Australian dollar supported is the expectation that, should the situation abroad deteriorate further, the Federal Reserve still has [a third round of quantitative easing] in its arsenal, and this prospect” Waterer said, “is placing a cap on upside moves in the U.S. dollar on safe-haven flows.”
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William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
