The U.S. dollar turned up Wednesday, pushing the euro to its lowest level since September 2010, as U.S. stocks extended losses after the European Central Bank released more data on its lending operations.
The euro saw little benefit earlier following Italy’s latest auction of short-term debt.
The U.S. dollar index , a measure of the greenback’s performance against six major currencies, rose to 80.526 from 79.792.
The euro fell to $1.2938, down from $1.3074 in North America late on Tuesday.
The shared currency dropped as low as $1.2910, its weakest level on a closing basis since September 2010, according to FactSet Research.
Boris Schlossberg, director of currency research at GFT, cautioned that trading volume has been very think which could exaggerate the markets’ reaction to news.
Against the Japanese yen, the greenback turned up to ¥77.95, from ¥77.85.
The euro also fell about 0.9% against the yen to ¥100.83, having touching its lowest level since 2001.
It also turned 0.5% higher against the Canadian dollar , which factors into the dollar index.
The British pound bought $1.5455, falling further from $1.5663.
David Song, currency analyst at DailyFX, said earlier it “seems as though market participants are scaling back on risk-taking behavior, and we may see the reserve currency extend the advance from earlier this month as it continues to benefit from safe-haven flows.”
The Standard & Poor’s 500 Index lost about 1.12% in afternoon U.S. trading.
For much of the year, gains in stocks have often meant a lower dollar, as traders become more confident about moving into riskier assets and feel less of a need for the relative safe-haven status of the greenback.
Analysts noted a release from the European Central Bank showing its balance sheet rose to a record 2.73 trillion euros, as lending to banks jumped from €214 billion to €879 billion in just one week, according to Kathleen Brooks, research director at Forex.com
Earlier, the euro showed little reaction after the Italian government sold €9 billion ($11.8 billion) of six-month bills in an auction on Wednesday.
The sale produced an average yield of 3.25%, down from more than 6.5% at a sale of six-month bills in late November. Bids exceeded demand 1.7 times versus 1.5 times at the November sale.
Strategists at Brown Brothers Harriman said the results indicate that Rome’s austerity measures and the European Central Bank’s long-term lending operations last week have helped ease strains in the peripheral bond market
