The dollar index ($DXY:![]()
$DXY 83.61, +0.60, +0.7%) , which measures the greenback against a basket of six major counterparts, traded at 83.536, up from 83.105 in late North American trading on Monday.
US Dollar Index Future - Spot Price
Last: 83.61+0.60+0.72%
6:34am 01/13/2009
Delayed quote data
6:34am 01/13/2009
Delayed quote data
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"The greenback will tend to do better in an environment where global growth worries are increasing," said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
He cited the Federal Reserve's "extremely proactive approach that has jam-packed the global financial system full of dollar liquidity."
Over the longer term, 2009 could prove volatile as markets assess the contrasting approaches taken by central banks in response to the financial crisis, Gallo said.
Asian stock markets sustained a broad-based sell-off Tuesday, and European stocks recently extended losses. Oil and mining firms led the way lower on worries the global slowdown will apply further pressure on commodity prices. See Asia Markets. Read Europe Markets.
Weak equities prompted investors to shift away from higher-yielding currencies, with repatriation benefiting the dollar and, in particular, the yen.
Also, a warning Monday from Standard & Poor's that it might downgrade Spain's sovereign credit rating from AAA status continued to cast a shadow over the euro as financial markets await the European Central Bank's meeting Thursday on euro-zone interest rates, strategists said.
Last Friday, S&P did the same for its credit ratings on Greece. It also cut the outlook on Ireland's rating to negative from stable. See full story on S&P's Spain rating.
Skepticism ensnares euro
Currency markets were skeptical of the euro "at the start of 2009, and the credit headlines on the European governments only reinforces this euro-skeptic market attitude," wrote strategists at KBC Bank in Brussels.
Looking out over the longer term, "we continue to have serious doubts on the chances of a protracted dollar rebound," but short-term momentum is increasingly negative for euro/U.S. dollar, they said.
Against this backdrop, the euro slipped to $1.3310 from $1.3373 on Monday. The single currency also fell to 118.55 yen, down from 119.09 yen.
The yen traded little changed against the dollar, with the U.S. unit buying 89.04 yen.
The British pound was under pressure against both the dollar and the euro, with foreign-exchange traders playing off the British Retail Consortium's monthly survey that showed that U.K. retailers endured the worst December in at least 14 years. See full story.
The pound fell to $1.4630, down 1.2%. The euro rose to 90.82 pence, up 0.8% on the day.
Also Tuesday, the New Zealand dollar came under heavy pressure after S&P cut the country's foreign-currency rating outlook to negative from stable.
S&P confirmed New Zealand's foreign-currency rating at AA+ and its local-currency rating at AAA, the two highest ratings, news reports said.
The U.S. dollar rallied 3.9% against the New Zealand currency to trade at NZ$1.8028 in recent action.
