FX round-up: Risk aversion fuels dollar gains

Date: Wednesday 10 Mar 2010

The dollar rose against most major currencies on Tuesday as jitters about the economic outlook triggered strong demand for safe haven investments.

Risk aversion prompted a wave of profit taking among commodities and sent the dollar index, which measures the US currency against a basket of six others, up 0.2% to 80.580.

The dollar was down at 89.98 yen compared to 90.29 yen on Monday as the Japanese currency’s safe haven qualities also came to the fore. The yen was broadly higher against major currencies as traders fretted about the economic outlook particularly in Europe, with concern that other EU countries will suffer the same fate as Greece.

The yen was boosted by Fitch Ratings negative comments on Portugal's austerity measures. The comments weighed on the euro, which traded 0.3% lower at $1.3595.

Sterling skidded to a one week low against the dollar at $1.4936 as a string of poor economic data and concern about the UK's sovereign rating weighed.

The UK trade deficit rose to a 17 month high in January, official figures showed, sparking concern about the UK economic recovery over the coming months.

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