Dollar Pulls Higher As Euro Worries Return

The U.S. dollar marched higher in Asia Tuesday as political uncertainty in Spain and Italy rekindled fears about the euro zone’s outlook, pulling investors toward the greenback’s appeal as a safe haven.

The ICE dollar index , which measures the greenback against a basket of six major global currencies, climbed to 79.712 from 79.589 in North America late on Monday.

The WSJ dollar index , a gauge of the U.S. currency’s moves against a slightly wider basket, rose to 71.10 from 70.99.

The euro, meanwhile, fell further from highs. Investors locked in recent gains as they considered pressure on Spanish Prime Minister Mariano Rajoy to resign amid allegations that his party accepted secret payments.

Reports that former Italian Prime Minister Silvio Berlusconi was gaining ground ahead of elections in the country also weighed on the currency.

“Caution will prevail in the near term as markets begin to question the veracity of the rally in risk assets registered over recent weeks,” said Mitul Kotecha, global head of foreign-exchange strategy at Credit Agricole.

He said that the service-sector-confidence data, due later in the day from the euro zone, “will also provoke further concerns revealing both continued contraction for most countries and divergence in the bigger economies, namely Germany and France.”

The common currency  slid back below $1.35, and was at $1.3483, compared with $1.3511. Against the Japanese unit , the euro was fetching 124.54 yen compared with ¥124.75.

The dollar was trading at ¥92.37, versus ¥92.30 in New York on Monday.

Elsewhere in the region, the Australian dollar fell after the country’s central bank on Tuesday left its benchmark interest rate at 3%, as was widely expected, and said an accommodative stance of monetary policy was appropriate.

The Aussie dollar  was changing hands for $1.0409, down from $1.0439.

The British pound  was at $1.5757, compared with $1.5767 in New York.

Marketwatch