USD Graphic Rewind: Dollar Index Climbs for Third Day as Portugal Contraction Weighs on Euro
The dollar index climbed to its highest level since late January as the euro continued to fall from favour with EU Finance Minister’s set to meet and discuss a strategy to combat the debt crisis in the EMU, with many feeling that they will be unsuccessful in resolving the issues. The dollar climbed early in the session despite global equities rising on the back of relief of Egypt’s political turmoil having ended as players shunned other major currencies. Renewed focus on debt fears in the euro-area drove the euro to a 3-week low after Portugal reported that its economy contracted in the fourth-quarter of 2010. Despite the euro’s weakness the greenback did give back a portion of its rise as US equities shrugged off early declines and traded mostly higher in the later part of the session.
Over-night we have seen the index trade modestly lower after Chinese CPI came in on the softer side easing some fears of over-heating and impending draconian policy measures from Beijing. The euro also has managed to climb, albeit modestly, ahead of German and Euro-zone GDP readings later in the European session, both of which are set to show the euro-area grew at a faster pace than the previous quarter.
Written by Jonathan Granby, DailyFX Research Team
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