The dollar generally advanced Wednesday, with the euro dropping to a six-week low versus the greenback after a weak German bond auction highlighted worries that Europe’s debt crisis has contaminated the core of the euro zone.
The euro exchanged at $1.3390, lower from $1.3513 in late North American session Tuesday.
The dollar index, which evaluates the US unit versus a trade-weighted pool of six other currencies, increased to 78.849 from 78.252 late Tuesday.
Strategists stated that as it has not been unusual for auctions of German government bonds to go technically exposed, forcing the Bundesbank to increase the slack, deprived demand at a sale of 10-year bunds on Wednesday was sufficient to send an already-weakened euro declining.
Jeremy Stretch, currency strategist at CIBC in London commented that the results disrupt the deficiency of appetite for Europe in general and proposes that if even Germany cannot draw buyers’s attraction, then the structural negatives are even poorer than we thought.
CIBC stays bearish on the euro in the short term, he added, with an original target at $1.3346 against the dollar.
Other key currencies dropped to the dollar comprised the British pound, Japan‘s yen and the Australian dollar.
Sterling dropped to $1.5569 against $1.5637, whereas the dollar rose to 77.20 yen against ¥77.00 Tuesday.
The Australian dollar declined by a better margin, losing ground1.2% to 97.30 US cents.