Dollar Edges Higher Ahead Of Cyprus Vote
The dollar moved higher in Asia trading hours on Tuesday ahead of a slate of economic data, with concern lingering over a rescue package for Cyprus.
The dollar index , which measures the greenback against a basket of six other currencies, traded at 82.683, up from 82.639 in late North American trading on Monday and well above 82.277 recorded late Friday.
The WSJ dollar index , which measures the greenback against a slightly wider currency basket, rose to 73.57 from 73.49 recorded Monday.
The dollar’s moves came ahead of housing-starts numbers and other data due later in the day. Strategists at Lloyds TSB Corporate Markets said the U.S. “housing starts and building permits data are likely to show that the broad improvement in the U.S housing market remains intact in February.”
At the start of the week, the dollar gained and the euro slumped after Cyprus announced a levy on deposits as part of a bailout plan for the country.
Next up for markets is a parliamentary vote in Cyprus over the bailout plan, although the timing of that vote is uncertain.
Still, “sentiment does seem to have improved in the markets after yesterday’s bloodbath,” according to IG Markets chief market strategist Chris Weston.
Against the Japanese yen , the dollar reached 95.54 yen, up from ¥95.21 in late North American trading Monday.
The euro was little changed at $1.2956, compared to $1.2954 in late trading Monday, with the ZEW index of German economic sentiment due out late Tuesday.
The strategists at Lloyds TSB Corporate Markets are expecting an improvement in the sentiment index to 49.5, up from 48.2 in February, “in line with the improvement in the broader outlook for Germany.”
The British pound traded at $1.5102, slipping fractionally from $1.5106 with inflation data on tap.
“The latest [U.K.] inflation numbers are expected to show that consumer price inflation rose to 2.8% in February, having been steady at 2.7% for the last four months. February’s rise would primarily reflect energy-price increases,” said the Lloyds TSB Corporate Markets strategists.
The Australian dollar slipped to $1.0384, representing a 0.1% loss for the day, according to FactSet data.
Minutes of the Reserve Bank of Australia’s last meeting — where the central bank kept its key rate on hold at 3% — were released Tuesday.
“The minutes are historical, and recent events in Cyprus provide a reminder of the still-compromised banking systems in parts of Europe and the fragile nature of confidence more generally,” said RBC Capital Markets strategist Su-Lin Ong.
Still, the minutes showed that the RBA’s message remains unchanged, she said.
“Firmly in wait-and-watch mode, it expects its policy actions to gain further traction,” she said.
Marketwatch
