Dollar edges lower ahead of Fed meeting
Euro finds footing as European bond markets rebound
April 24, 2012, 8:19 a.m. EDT
By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) The dollar edged lower versus most major rivals on Tuesday, ahead of the start of a two-day policy meeting of the U.S. Federal Reserve, while the euro regained its footing as Dutch and other non-German European bonds bounced back from the previous days rout.
The ICE dollar index DXY -0.21% , which measures the greenback against a basket of six other currencies, traded at 79.292, down from 79.406 in late North American trading Monday.
The main event this weekthe Federal Open Market Committee meeting/Ben Bernanke press conferencekicks off today and concludes tomorrow, which may overshadow [other] releases, Michael Turner, strategist at RBC Capital Markets, said Tuesday.
The dollar had gained ground on Monday, with economic data and political developments raising more questions about Europes ability to tackle its debt problems.
But Tuesday, the euro EURUSD +0.39% moved back up against the dollar, trading at $1.3170, from $1.3149.
The Netherlands successfully sold 2 billion euros ($2.6 billion) of 2- and 25-year bonds as investors awaited a speech by Dutch Prime Minister Mark Rutte to parliament later in the day that is expected to lay out the path to new elections a day after Ruttes government collapsed amid resistance to further austerity measures.
Ratings firm Moodys late Monday said the governments fall was credit-negative but made no change to its stable outlook on the countrys AAA rating.
Overall today, euro-zone political risks prevail, said Kathleen Brooks, research director at Forex.com. The markets are digesting what political disillusionment in Holland and France really means for the future of the euro zone. Holland had to sell debt today, which went off relatively OK.
Spain also sold debt, finding solid demand for three- and six-month notes, but saw yields rise.
Dutch bond yields jumped and the premium demanded by investors to hold Dutch debt over German bunds rose to its highest level in three years on Monday.
The yield on 10-year Dutch bonds declined Tuesday and the cost of insuring $10 million of Dutch debt against default using credit default swaps fell to $130,000 a year from $133,000 on Monday, according to data provider Markit.