LONDON (ShareCast) - The dollar rose against most major currencies on Monday apart from the yen after the World Bank warned that it expects the global recession to be deeper than previously thought.
Fresh demand for safe haven assets took the
greenback and the yen higher at the start of the week. The World Bank said the global economy is expected to shrink 2.9% this year, more than the 1.7% contraction forecast back in March. It also said global trade will drop by almost 10% this year while output is predicted to fall by 2.9%.
Traders took a case of the heebie jeebies and Friday's appetite for riskier trades faded as Monday's session progressed.
The dollar index, which measures the US currency against six others, rose to 80.784 from 80.246 late Friday.
A poor performance amongst global equities also increased demand for the dollar and yen while the euro turned lower on concern about the ECB's one-year refinancing operation on Wednesday.
Unease about Germany's widening budget shortfall also hurt appetite for the euro zone currency, analysts said. The euro fell to $1.3864 from $1.3952 on Friday. Sterling was down 0.8% to $1.6355. The euro eased 0.2% against the pound to 84.21p.
Renewed concern about the global outlook capped bigger gains for the pound against the euro. Traders also sat cautiously ahead of the US Federal Reserve policy meeting, which starts today.
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