Forex News – Dollar weak on broadly positive market sentiment ahead of Ecofin meeting

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The euro was little changed in the North American session after reversing all gains from previously in the day. EURUSD rose to 1.3440 in European trading following a successful Italian bond auction where the Italian government met its target and sold selling 7.5 billion euros of bonds. Euro fell to1.3293 in New York trading after news that the ECB was unable to fully “sterilize” the impact of its government bond purchases on the money supply.The focus turns to the Ecofin meeting in Brussels and whether the European finance ministers will reach a deal to expand the EFSF rescue fund to 1 trillion euros. Today the Eurogroup approved the 6 billion euro aid loan to Greece, which is the sixth tranche from the first bailout package.


The dollar remained weaker compared to Monday as safe haven flows continue out of the greenback. The dollar index, which measures the performance of the greenback against a basket of six major currencies, dropped to 79.012 from Monday’s 79.236. Investors ignored positive US data from the Conference Board which showed the consumer confidence index jumped to 56 in November, its highest since July, on improved expectations on the US economy.


Sterling gained 1.2 percent against the dollar on the day, peaking at a day high of 1.5655 on upbeat sentiment. Cable slightly pared gains after Chancellor of the Exchequer George Osborne’s autumn budget statement and updated budget figures from the independent Office for Budget Responsibility which lowered the UK’s growth forecasts. GBPUSD eased into a range, supported above 1.5600.


The Canadian dollar strengthened to its highest level against the US dollar in over a week, tracking gains in crude oil which rose 2.8 percent on the day. USDCAD reached a low of 1.0257 in the European session and then slightly corrected to pause. The loonie as little changed after data on the Canadian current account deficit, which narrowed less than expected in the third quarter.


Against the Japanese yen the dollar fell to 77.61 in European trading and was little changed in the US session.