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CURRENCIES : Dollar Edges Higher Against Rivals

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11/26/2012 | 05:24am CEST

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) ? The dollar moved higher against rivals Monday as Europe?s debt problems garnered renewed attention, with euro-zone finance ministers set to reconvene later in the global trading day.

The ICE dollar index (DXY), which measures the greenback against a basket of six other currencies, reached 80.295 on Monday, up from 80.190 in Friday trading.

?It is clear that there are still many layers of uncertainty lying ahead,? said strategists at Credit Agricole, citing last week?s failure to make progress in Europe Union budget talks, weekend elections in Spain and ongoing talks over Greece?s finances.

Euro-zone finance ministers were due to commence another discussion over approval for Greece?s latest aid tranche Monday.

Should the issue be resolved, ?this will likely trigger a gain in the euro despite softer economic data in the euro zone,? said the Credit Agricole strategists.

The euro (EURUSD)?traded at $1.2955 on Monday, down slightly from $1.2983 on Friday.

The British pound (GBPUSD)?reached $1.6027, off from $1.6040 in late Friday trading.

While the dollar weakened a touch against the yen Monday, it remained relatively strong, having gained 1.3% against the Japanese currency last week and 3.3% so far in November.

On Monday, the dollar (USDJPY)?bought ?82.18, down from ?82.35 in late trading on Friday.

The Bank of Japan released the minutes Monday from its Oct. 30 policy meeting, which showed that two members favored strengthening the wording of the central bank?s commitment to ?powerful easing.?

The members wanted the central bank to say that it would continue with easing until its 1% inflation goal has been ?steadily maintained? rather than the current wording, which states that the bank will ease until the goal is in sight.

With an election looming in December and Japan?s main opposition party stating that it wants to implement an inflation target of 2%, Barclays strategists said that ?the timing of the more aggressive stance to target higher inflation is likely to depend on global factors as well, but the stars appear to be aligning for the changes to take place in the early part of 2013.?

?A back-of-the-envelope calculation suggests the upward move in [the dollar against the yen] can be surprisingly steep in response to higher inflation expectations,? they said.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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