By: Barbara Zigah
The U.S. Dollar saw broad gains against major currencies in the Asian trading session, as investors again sought refuge in the safe haven assets. The Eurozone remains the focus, with investor worries escalating over plans for a new rescue attempt for Dexia, the Franco-Belgian bank on the brink of bankruptcy as a result of sovereign debt exposure. The U.S. Dollar Index rose to a 6-week high to mark 78.526 .DXY; the Index gauges the greenback’s strength versus other major currencies. The greenback also rose in paired trading against the Euro, trading at $1.3472, a gain of 0.2%. Many analysts say that they are exceedingly Euro-bearish, as there is nothing worthwhile to sustain it otherwise.
On the other hand, the Euro could find support from a U.S. credit rating review, and the possible threat of a downgrade; Fitch’s credit review of U.S. sovereign debt is expected before the month’s end, and the recent U.S. Super Committee failure could weigh heavily.
Risk appetite was further dimmed by news that Chinese industrial activity saw a large decline in November, with the flash PMI reading coming in at 48, the lowest in more than two years and below the 50 threshold which delineates expansion from contraction in the sector. That news sent the Australian Dollar down to $0.9756 which struck a fresh 6-week low against the U.S. Dollar.