Dollar Edges Higher As EUR/USD Falls on German Political Uncertainty
The dollar rose sharply against a basket of major currencies on Monday, benefitting from a slump in the euro amid growing political uncertainty in Germany after Chancellor Angela Merkel failed to form a three-way coalition.
Political uncertainty swept across Germany on Monday, weighing on the euro, after talks to form the country's next government collapsed overnight, raising questions about the future leadership position of Angela Merkel.
The slump in the euro pushed the dollar to a nearly one-week high against its rivals but gains were capped by an uptick in sterling amid fading Brexit woes.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.31% to 93.90.
The reports sparked investor hopes that Brexit proceedings can finally progress onto more pressing issues such as future trading terms as disagreements between the UK and EU on the so-called EU divorce bill was said to be one of the main factors contributing to the recent deadlock in Brexit negotiations.
Elsewhere USD/JPY made strong gains, rising 0.40% to Y112.54 as renewed investor appetite for riskier assets reduced demand for safe-haven yen.
USD/CAD rose 0.23% to C$1.2788 as slump in the oil prices continued to weigh on the oil sensitive Canadian dollar.
The move higher in the greenback comes just days after data showed speculators cut their bearish bets on the dollar for the seventh straight week.
Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar net position totalling -$643 million, the lowest since mid-July, according to the latest data from the CFTC and Reuters.