U.S. Dollar Rises Amid Risk Aversion
The U.S. dollar strengthened against the other major currencies in the early European session on Monday amid risk aversion, as oil prices extended decline and China's central bank weakened the central parity rate of yuan by the most since January.
The U.K.'s FTSE 100 index is currently down 0.19 percent or 12.02 points at 6,177, France's CAC 40 index is down 0.75 percent or 33.33 points at 4,429 and Germany's DAX is down 0.50 percent or 49.90 points at 9,900.
People's Bank of China Governor Zhou Xiaochuan on Sunday sounded a warning over rising debt levels but shrugged off concerns about the rapid decline of the country's foreign exchange reserves, saying it's natural to see profit-seeking speculators leave when they think the timing is appropriate.
Crude oil for May delivery are currently down $0.63 at $40.51 a barrel. Oil prices fell after U.S. Baker Hughes rig count data released on Friday showed that the number of oil rigs in the U.S. rose for the first time since December. Concerns over supply glut also led to fall in prices.
Speaking at an international central banking conference in Paris, Richmond Fed President Jeffrey Lacker said that the Fed is likely to achieve its inflation target of 2 percent in coming years.
Lacker also said that the inflation will rise significantly after oil price bottoms out.
In the Asian trading today, the U.S. dollar held steady against its major rivals.
In the early European session, the U.S. dollar rose to 4-day highs of 1.1235 against the euro and 1.4375 against the pound, from early lows of 1.1285 and 1.4467, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.10 against the euro and 1.40 against the pound. Against the Swiss franc and the Canadian dollar, the greenback advanced to 4-day highs of 0.9729 and 1.3092 from early lows of 0.9689 and 1.3017, respectively. On the upside, 0.99 against the franc and 1.35 against the loonie are seen as the next resistance levels for the greenback.
Meanwhile, the greenback, rose to 111.56 against the yen, from an early low of 111.22 and held steady thereafter.
Against the Australian and the New Zealand dollars, the greenback fell to 0.7626 and 0.6786 from early 4-day highs of 0.7569 and 0.6746, respectively. The greenback is likely to find support around 0.77 against the aussie and 0.69 against the kiwi.
Looking ahead, U.S. existing home sales data for February is slated for release in the New York session.
At 12:40 pm ET, Federal Reserve Bank of Atlanta President Dennis Lockhart is expected to speak on the economic outlook and monetary policy before the Rotary Club of Savannah.
The markets in Japan are closed for the Vernal Equinox Day holiday.
The material has been provided by InstaForex Company - www.instaforex.com
