By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) —The dollar ticked up against the euro and several rivals, with Europe’s sovereign debt woes and heightened tension on the Korean peninsular depressing investor appetite for risk-taking.
The dollar index (DXY 80.39, +0.02, +0.02%) — which measures the U.S. unit’s performance against a basket of six major currencies — traded at 80.580 on Monday, up from 80.402 in late North American trading on Friday.
The euro (EURUSD 1.3161, -0.0022, -0.1669%) traded at $1.3150 against the dollar on Monday, down from $1.3173 in late North American action on Friday.
European Union leaders agreed late last week to implement a permanent rescue fund for the region however the currency is struggling after the leaders “failed to agree on expanding the size of the bailout fund,” noted currency strategists at Credit Agricole.
The strategists added: “another blow to the euro came with Moody’s five notch downgrade of Ireland’s credit ratings, surprising because of its severity rather than the downgrade itself.”
The Australian dollar (AUDUSD 0.9911, +0.0026, +0.2632%) traded at 98.79 U.S. cents against the greenback on Monday, down 0.1%. See real time currencies quotes and tools.
“Geopolitical tensions from the Korean region have popped up again this morning which has served to keep the risk trade on the back burner. This is causing trading in the Australian dollar to be quite subdued at the start the week,” said Tim Waterer, dealer at CMC Markets.
South Korea is preparing to test artillery on Yeonpyeong Island, according to reports. North Korea has threatened action if the drill goes ahead, in what could turn into a repeat of last month’s attack on the island.
On Sunday, South Korea also unveiled a plan for a levy on foreign currency debt held by banks as it acts to try and curb, according to reports.
The dollar bought 83.92 yen (USDYEN 83.7900, -0.2700, -0.3212%) , up from ¥83.90 in late trading on Friday.
