NS: Dollar Slightly Lower As E.U. Backs Greek Plan
By William L. Watts
The U.S. dollar was weaker versus most major rivals Wednesday, with the euro gaining ground as the European Union offered a qualified endorsement of Greece's plans to close its budget gap.
The euro traded at $1.3999, up slightly from $1.3966 in North American trade late Tuesday. The single currency had dipped to a seven-month low versus the dollar last week and has been under pressure versus most major rivals since worries about Greece's debt woes and fiscal problems in other euro-zone countries moved into the spotlight in December.
The commission on Wednesday endorsed Greece's plan to cut its deficit from a level equal to nearly 13% of gross domestic product last year to 2.8% by 2012, just under the E.U.'s 3% limit. But the commission warned it would closely monitor the budget measures and a host of accompanying reforms.
"With the Fed sidelined for a good while, the U.S. dollar has probably more to lose in the short-term if pessimism over public deficits in the E.U. periphery settles," said Kenneth Broux, market economist at Lloyds TSB.
The dollar slipped in Asian trade and remained on the defensive versus most major rivals. Rising Asian and European equities markets whetted investors' appetite for risk and higher-yielding currencies.
The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, fell to 78.879 from 79.003 in late Tuesday's North American trading.
"Asian [stock] indices continued to enjoy an improvement in sentiment and this kept the dollar and yen on the softer side, although Tuesday's ranges remained intact for the most part, with speculative interest fairly low," wrote analysts at Action Economics.
The dollar erased early weakness versus the Japanese currency, however, to trade at 90.57 yen, up from 90.40 yen late Tuesday.
The Australian dollar gained 0.5% to trade at 88.88 U.S. cents.
The British pound changed hands at $1.5979, little changed from late Tuesday after pushing above $1.6000 in earlier action on buying tied to the Kraft Foods (KFT) acquisition of British confectioner Cadbury, analysts said.
