Forex Focus - The U.S. dollar turned higher against its major counterparts on Tuesday, as fears over high Spanish borrowing costs and the country’s fragile banking sector intensified, spurring safe haven demand.
During European afternoon trade, the dollar re-approached an almost two-year high against the euro, with EUR/USD sliding 0.16% to hit 1.2521.
Market sentiment softened amid concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession hit economy fuelled fears that Madrid will be forced to seek an international bailout.
Earlier Tuesday, Spain’s Treasury auctioned EUR8.5 billion of six-month bonds at an average yield of 2.10%, a six-month high, up from 1.77% at a similar auction last month.
The yield on Spanish 10-year bonds rose to 6.48% following the auction, hovering just below the 2012 high of 6.50% hit Monday after the government announced that it was to recapitalize one of the country’s largest commercial lenders.
The greenback also pushed higher against the pound, with GBP/USD losing 0.11% to hit 1.5664.
Elsewhere, the greenback edged higher against the yen and the Swiss franc, with USD/JPY rising 0.13% to hit 79.37 and USD/CHF adding 0.09% to hit 0.9590.
In Japan, official data showed earlier that retail sales rose less-than-expected in April, advancing 5.8%, disappointing expectations for a 6.2% increase.
A separate report showed that household spending in Japan rose 2.6% in April, beating expectations for a 2.5% rise.
In addition, the greenback gained ground against its Canadian, Australian and New Zealand counterparts, with USD/CAD easing up 0.09% to hit 1.0245, AUD/USD slipping 0.17% to hit 0.9837 and NZD/USD shedding 0.26% to hit 0.7598.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.05%, to trade at 82.39.
Later in the day, the U.S. was to release reports on house price inflation and consumer confidence.