IV:Dollar off highs against euro but remains supported
Investing.com - The dollar pulled back from seven-week highs against the euro on Tuesday, but looked likely to remain supported as uncertainty over Italian election results fuelled fears over fresh financial instability in the euro zone.
During European late morning trade, the dollar was lower against the euro, with EUR/USD rising 0.24% to 1.3095.
The euro looked likely to remain under pressure as fears over a deadlocked parliament in Italy dampened hopes that the crisis in the region has turned a corner and pushed Italian and Spanish borrowing costs higher.
The yield on Italian 10-year bonds jumped to 4.87% on Tuesday from 4.37% on Monday, while the yield on Spanish 10-year bonds rose to 5.5% from 5.1% on Monday.
Elsewhere, the dollar pushed higher against the yen, trimming some of the previous session’s steep losses, with USD/JPY up 0.23% to 92.03 as expectations for more aggressive easing steps by the Bank of Japan remained intact.
The greenback pulled away from 31-month highs against the pound, with GBP/USD easing up 0.11% to 1.5178.
Sentiment on sterling remained weak after rating’s agency Moody’s downgraded the U.K.’s triple-A rating by one notch on Friday, reinforcing concerns that the Bank of England may resume asset purchases this year.
Elsewhere, the greenback was lower against the Swiss franc, with USD/CHF down 0.27% to 0.9298.
The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD dipping 0.02% to 1.0258, AUD/USD edging down 0.03% to 1.0253 and NZD/USD losing 0.28% to trade at 0.8302.
The Australian dollar came under pressure earlier after a senior official at the Reserve Bank of Australia said policymakers are willing to cut interest rates further to offset the strong Australian dollar as economic growth slows.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dipped 0.03% to 81.81.
Market participants were looking ahead to congressional testimony from Federal Reserve Chairman Ben Bernanke later in the trading day, after last week’s minutes of the central bank’s January meeting showed that some policymakers favored an early end to the Fed's monetary easing measures.
The U.S. was also to release a report on consumer confidence and official data on new home sales later Tuesday.
