FX round-up: Dollar firms as profit taking hits euro
Wed 19 Sep 2012
LONDON (SHARECAST) - The dollar made further headway on Tuesday as safe haven flows increased amid fears about growing tensions between China and Japan and the ongoing Eurozone crisis.
The dollar index, which measures the greenback against six major currencies, rose to 79.227 from 79.044 on Monday.
Markets grew increasingly nervous about anti-Japan protests China over a territorial dispute. Many Japanese companies have been forced to close operations in fear of them being targeted by protestors.
Meanwhile risk appetite was kept at bay while markets await Spain's plans with regards to a bailout. European Central Bank officials and the Spanish Deputy Prime Minister, Saenz de Santamaria, have signalled that Spain could make a formal request for assistance.
However time is running short and while Spain successfully sold €4.6bn in short-term debt, the yield on the 10-year government bonds, which is a key measure of borrowing rates, again rose above 6%, a level which is seen as unsustainable.
Sterling rose against the euro on Monday amid nerves about Spain and following a good deal of profit taking after the single currency's recent rally. Against the dollar, it rose to a four-and-a-half month high on Tuesday.
Against the Japanese yen, the greenback bought ¥78.88 from ¥78.74 previously.
The Australian dollar fell to $1.0444 from $1.0457 on Monday after the release of the Reserve Bank of Australia's dovish minutes from its latest interest-rate meeting.