Dollar Softer; Euro Tests Upside

NEW YORK ( BBH) -- The U.S. dollar was trading mostly softer vs. the majors, with the exception of the antipodean currencies. In Asian trading, the euro rallied sharply from a three-month low following comments from Japan's Yoshihiko Noda on potential Japanese demand, stalled, and is once again testing the upside as North American trading gets underway.

We could see further near-term gains for the euro as the U.S.-German two-year spread moved to its highest level since Dec. 22. The 1.2980-1.3000 area will be key to whether we see a deeper dollar correction.

Cable consolidated in relatively quite European trade, topping out around $1.5590 as Thursday's Bank of England meeting comes into focus. Dollar/yen rallied above 83.00 yen but continues to trade in very narrow ranges. Elsewhere, the Australian dollar is the biggest mover on the day and extended earlier losses to trade down to 0.9820 before stabilizing. It looks set to drop further after a resurgence in the Queensland floods overnight led to more deaths and property damage.

Global bond markets were mostly higher. Eurozone spreads have mostly narrowed this morning after Portugal reported better-than-expected budget data. Belgium's King Albert II asked the caretaker prime minister to present a consolidated budget in an effort to quell market fears, but Belgium-German 10-year spreads widened again to a record Tuesday.

Elsewhere in Europe, Greece sold €1.95 billion of 26-week Treasury bills at a yield of 4.90% with a bid to cover of 3.4 and solid demand. Meanwhile, German 10-year yields were down 1 basis point, while 10-year U.S. Treasury yields rose 2 basis points.
TheStreet Tools
* Ex-Dividend Date Calendar
* Top-Rated Stocks
* Highest-Yielding Stocks
* 2011 Earnings Calendar

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

More from Currencies

Bank of England Holds Rates Steady, But Vote Shift Signals Hawkish Tone

Bank of England Holds Rates Steady, But Vote Shift Signals Hawkish Tone

Bitcoin Today: Prices Close to Flat in Low-Volume Trading

Bitcoin Today: Prices Close to Flat in Low-Volume Trading

Markets Wobble as U.S. Readies More China Tariffs

Markets Wobble as U.S. Readies More China Tariffs

Watch These Two Crypto Experts Fiercely Debate the Future of Regulation

Watch These Two Crypto Experts Fiercely Debate the Future of Regulation

Bitcoin Today: Prices Attempt to Rally Following Early Weakness

Bitcoin Today: Prices Attempt to Rally Following Early Weakness