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The dollar declined versus the euro on Tuesday.
Written by article default Tuesday, 18 May 2010 06:22
Market OverviewThe dollar declined versus the euro on Tuesday as the shared currency saw a respite from selling pressure and equity markets rebounded, indicating more comfort among investors to hold assets considered riskier and less demand for the relative safe-haven status of the greenback.
The euro rose to USD1.2432, up from USD1.2384 in North American trading late Monday, a day on which it sank as low as USD1.2233 its lowest level since April 2006.
Against the Japanese yen, the euro rose to JPY115.36, up from JPY114.61 Monday.
The dollar index (DXY), which tracks the U.S. unit against a trade-weighted basket of six major currencies, slipped to 85.934, down from 86.240 late Monday.
Greece's Finance Ministry confirmed Tuesday it had received 14.5 billion (USD18.4 billion) in bilateral loans from fellow euro-zone countries via the European Commission. The funds come on top of the 5.5 billion already received from the International Monetary Fund and will ensure that Greece meets a 19 billion refunding commitment on Wednesday.
The euro showed little reaction to much steeper-than-expected drop in the ZEW gauge of German investor confidence.
The dollar also remained lower after a pair of U.S. economic reports showed housing starts rose more than expected while producer prices fell last month.
The British pound turned up versus the dollar to USD1.4493, from USD1.4472 late Monday. Sterling was undercut earlier by a faster-than-expected acceleration of the annual inflation rate to 3.7% in April.
Market expectation
EUR has retreated from its earlier gains vs USD and has effectively erased its gains on the session, returning to USD1.2399 vs USD1.2392 late Mon. The retreat for stocks from their solid start is likely driving the retracement in EUR.
The pause in pressure to sell the euro and the bigger appetite for risk isn’t expected to last. Many analysts are calling for the euro's decline to resume in the near term as investors continue to worry about euro-zone sovereign debt problems and their implications for growth.