Plus   Neg

Dollar Climbs On Risk Aversion

In the Asian session on Monday, the U.S. dollar strengthened against other major currencies as renewed concerns over Europe's sovereign debt crisis prompted traders to seek safe-haven assets.

Fitch's downgrade of Greek debt and Standard & Poor's threat that it may cut Italy's credit rating fanned concerns over contagion to the other economies with debt issues, causing a slide in equities and commodity prices.

The collapse of the Spanish ruling party in the regional elections on Sunday also increased risk aversion.

The opposition People's Party won 38 percent of the vote in municipal elections, compared with 28 percent for the ruling Socialists, with 99 percent of votes counted, reports said quoting the Interior Ministry.

Voting took place in Spain amid mass protests against high unemployment and the government's handling of the economy.

Adding to worries, survey results from Markit Economics showed that China's manufacturing sector expanded at the slowest pace in ten months in May, while output growth eased for the second successive month.

The flash manufacturing purchasing manages' index fell to 51.1 from 51.8 in April.

The manufacturing output index also slipped to a ten month low in May, falling to 50.9 from 51.8 in April.

The U.S. dollar rose to a 5-day high of 1.0577 against the Australian dollar. The next upside target level for the greenback is seen at 1.055. At Friday's close, the aussie-greenback pair was quoted at 1.0668.

Against the New Zealand dollar, the U.S. dollar climbed to a 4-day high of 0.7898, compared to Friday's close of 0.7966. On the upside, 0.788 is seen as the next target level for the greenback.

The US dollar is now worth 0.9765 against the Canadian dollar, up from last week's close of 0.9737. If the greenback gains further, it may likely target the 0.980 level.

The US dollar strengthened to a 1-week high of 1.4080 against the euro and a 4-day high of 82.03 against the yen. The next upside target level for the dollar is seen at 1.405 against the euro and 82.2 against the yen. The dollar-yen and the euro-dollar pairs were worth 81.72 and 1.4164, respectively at last week's close.

The dollar edged up to 1.6198 against the pound, compared to Friday's close of 1.6245. On the upside, 1.618 is seen as the next target level for the U.S. currency.

The dollar that declined to 0.8757 against the Swiss franc at 9:05 pm ET recovered thereafter. The dollar-franc pair is currently worth 0.8790, compared to last week's close of 0.8775. If the dollar rises further, it may target the 0.883 level.

Looking ahead, Japan's final report on leading economic and coincident indexes for March are expected at 1:00 am ET.

In the European session, Swiss M3 money supply for April, preliminary PMI reports for May from the major European economies are slated for release.

For comments and feedback contact: editorial@rttnews.com

Follow RTT