| CATEGORY: FX |
Tue 31 Jul 2012
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LONDON (SHARECAST) - The dollar made headway against the euro on Monday for the first time in four days as investors remained cautious ahead this week's European Central Bank and US Federal Reserve policy meetings.
Risk appetite faded as investors worried that actions taken by the ECB may not be as strong as recently hoped following comments from the ECB President Mario Draghi that the bank would do whatever it takes to save the euro.
Hopes about decisive action to stem the Eurozone crisis had also been boosted following similar comments from German Chancellor Angela Merkel and French President Francois Hollande.
The ECB is expected to announce that it will re-open its government bond buying programme to help reduce Spanish and Italian government bond yields. Other reports suggest that the ECB is considering another long-term-refinancing operation (LTRO), which offers cheaper funds to financial institutions.
The euro fell to $1.2256 from $1.2320 on Friday after last week's impressive rally.
The dollar index, which measures the greenback against a basket of six trade weighted currencies, climbed to 82.829 from 82.342 the previous session.
Against the Japanese yen, the dollar was down around 0.4% on Monday to buy ¥78.19 as investors mulled data showing a surprise monthly drop in Japan’s industrial production.
The British pound fetched $1.5704 versus $1.5728 the previous session ahead of the Bank of England's policy meeting on later this week.
UK economic data provided little comfort on Monday as the number of mortgages approved for new house purchase fell sharply in June, to the lowest level since December 2010.
CJ
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