Dollar turns lower vs. euro, sentiment remains fragile

Shutterstock photo - The dollar turned lower against the euro on Thursday as banks reopened amid calm in Cyprus following two weeks of closures, but market sentiment remained fragile as concerns over the debt crisis in the euro zone lingered.

During U.S. morning trade, the dollar pulled back from four-month highs against the euro, with EUR/USD rising 0.46% to 1.2837, up from session lows of 1.2755.

The euro recovered as banks in Cyprus reopened for the first time in almost two weeks with strict capital controls in place.

Cypriot banks had been closed since March 16 amid fears of a bank run while bailout talks were under way.

But investors remained wary that the bailout deal for Cyprus could set a precedent for future bailouts in larger euro zone states, with big bank depositors and senior bond holders forced to suffer losses.

Elsewhere, Italy saw borrowing costs rise amid growing doubts over whether a stable coalition government can be formed amid an ongoing political deadlock.

The dollar was lower against the broadly firmer yen, with USD/JPY down 0.41% to 94.06, but looked likely to remain supported as expectations for more aggressive easing measures by the Bank of Japan remained intact.

The dollar was also lower against the pound, with GBP/USD rising 0.40% to 1.5187.

Sterling found support after official data showed that U.K. service output rose 0.3% in January, the biggest rise since August, easing concerns over the threat of a triple-dip recession.

The dollar fell to session lows against the Swiss franc, with USD/CHF down 0.61% to 0.9485.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD slipping 0.13% to 1.0147, AUD/USD losing 0.17% to trade at 1.0424 and NZD/USD edging up 0.13% to 0.8380.

In Canada, official data showed that the economy expanded 0.2% in January, slightly above expectations for growth of 0.1%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.43% to 83.05.

In the U.S., official data showed that gross domestic product expanded at an annual rate of 0.4% in the three months to December, lower than forecasts for a 0.5% expansion.

The growth rate was the slowest since the first quarter of 2011, but was higher than initial estimates for growth of 0.1%.

A separate report showed that the number of people who filed for initial unemployment assistance in the U.S. rose by 16,000 to a seasonally adjusted 357,000 last week, compared to expectations for an increase to 340,000. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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