The ICE US Dollar Index starts the week holding firm around the 79 mark and may see a boost higher through 80 as mulitple problems facing Europe continue to hit the euro currency.
Latest Dollar Index Rate
The ICE US Dollar Index, which tracks the US dollar against six major world currencies was trading at 79.485 – 09.37 GMT today, from the session open of 79.140.
The ICE Dollar Index slid on Friday after the release of some well received US earnings and a surprise rise in a German business confidence gauge. The euro currency fell to $1.3195 Monday, down from $1.3219 in late trading Friday.
The US currency was up against the yen, with USD/JPY trading up 0.06 percent at 81.57, and up against the Swiss franc, with USD/CHF up 0.13 percent and trading at 0.9102.
The dollar was up against its counterparts in Canada, Australia and New Zealand, with USD/CAD up 0.14 percent at 0.9936, AUD/USD down 0.12 percent at 1.0367 and NZD/USD down 0.13 percent at 0.8176.
French Elections
The euro was weaker against the US dollar and yen during Asian trading Monday, following French President Nicolas Sarkozy’s poor showing in Sunday’s first round of France’s presidential vote.
Sarkozy came in second to Socialist François Hollande, who garnered between 27-28 percent of the vote compared to Sarkozy’s 25-27 percent, according to pollsters.
Attention will now focus on a run-off between Sarkozy and Hollande on May 6, with some market analysts suggesting victory for Hollande might weaken the euro.
Spanish Economy Contracts
Spain’s central bank said Monday that the country’s economy contracted 0.4 percent in the first quarter from the fourth, evidence that a worsening downturn is making it tougher for Madrid to reach ambitious austerity targets.
On an annual basis, the economy contracted 0.5 percent, the first negative reading after seven consecutive quarters of modest growth, the Bank of Spain said in its monthly economic report. This marks the official end of a mild recovery between late 2010 and late 2011, after a deep slump started in 2008 in tandem with the country’s property bust.
The central bank also said that Spain’s economy, the fourth largest in the euro zone, faces a series of quarters of uncertainty and downside risks, related with developments in the euro-zone debt crisis.
Spain’s borrowing costs surged Monday amid renewed concerns on the short-term prospects in the monetary area, with the yield on the benchmark 10-year bond rising above the psychological 6 percent level. Spain’s debt insurance costs hit a fresh record, with the five-year credit default swap eight basis points wider at 510 basis points.
Dutch Government Collapse
The Dutch government teetered on the verge of collapse on Monday after an anti EU party refused to back big deficit cuts, creating a new hurdle for euro zone leaders who are already struggling with a pact on overcoming the bloc’s budget problems.
Prime Minister Mark Rutte’s cabinet was due to meet at 07.30 GMT to discuss whether it can push through budget cuts to meet EU targets after the political crisis broke at the weekend, and whether to offer its resignation.
The prospect of new elections pushed up borrowing costs for the Netherlands, traditionally one of the strongest euro zone economies, as the country was drawn into Europe’s debt crisis and elections appeared almost inevitable.
Original post:
Dollar Index holding out above 79 as problems in Europe hit the euro currency
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