The U.S. dollar edged lower on Thursday against major rivals as investors looked ahead to key developments in Spain this week, including the government’s budget, with a little bit of optimism.
The ICE dollar index , which measures the greenback against a basket of six major currencies, traded at 79.760, from 79.840 in late North American trading on Wednesday.
The euro reached $1.2877, from $1.2868.
Strategists at RBC Capital Markets said market moves in Asia on Thursday likely reflected “a creeping hope that today’s Spanish budget proves a near-term circuit breaker.”
“Leaks thus far suggest the budget will aim to satisfy possible conditionality imposed by a European Financial Stability Facility /European Stability Mechanism program, which has led to natural speculation that a formal request for at least an Enhanced Conditions Credit Line will soon be forthcoming,” they added.
The Spanish government is set to announce a new reform package and a budget likely to include more austerity measures on Thursday.
Results of stress tests for Spanish banks are due Friday, as is a review of Spain’s credit rating by Moody’s Investors Service, with a downgrade of Spain’s debt to junk status a possibility.
To date, the Spanish government has held off requesting a bailout from its European partners.
The strategists also said that risk was given “a small fillip” after the Chinese central bank made a record injection of liquidity this week. Read more on PBOC money market move.
In other currency moves, the British pound traded at $1.6183, from $1.6159.
Against the Japanese currency , the dollar declined to 77.658 yen, from ¥77.72 in late trading on Wednesday.
The Australian dollar reached $1.0398, from $1.0343.
Marketwatch
