Dollar climbs in London

The dollar held near the one-month high it hit in Asian trade against a currency basket and the euro fell on Wednesday as concerns about company earnings drove investors into safer currencies. Uncertainty over whether and when Spain will apply for a bailout and downbeat comments on the euro zone economy from European Central Bank President Mario Draghi also weighed on the euro, which fell to 10-day lows versus the dollar and the yen.
The euro was down 0.1 percent at $1.2868 and was on track to fall for a third successive day, having dropped 2.3 percent since mid-September's four-month high. "The market had factored in that the ECB had gone to all these lengths to resurrect the bond-buying plan with Spain in mind, and Spain just hasn't taken the bait as yet," Standard Bank's head of G10 currency research Steve Barrow said.
"If Spain had made that request when the euro was strong and bond yields had already come down quite a bit, positive momentum could have pushed the euro dollar on to $1.35. The problem now is that maybe their chance has been missed, and instead perhaps Spain will now not do anything until yields start to move up."
The euro has slipped since hitting a high of $1.3072 on Friday but remains above chart support at its 200-day moving average of $1.2822 and the October 1 low of $1.2803. A break below there would leave it vulnerable to more falls. The euro was also down 0.1 percent against the yen at 100.72 yen, having earlier hit a 10-day low of 100.43 yen.
Draghi said the region faced a long road to recovery, despite the ECB's plan to buy the bonds of indebted euro zone countries, and that there was no alternative to budget austerity. The dollar index was up 0.1 percent at 80.025, having earlier hit 80.186, its strongest since September 11. Appetite for currencies seen as higher risk has been hurt by worries over the impact of potentially weak company earnings on equities, with European shares last down 0.3 percent.
"The big question is whether euro/dollar can break below $1.28, which could support momentum to the downside. But this will be difficult unless we get very negative equity markets," said Niels Christensen, currency strategist at Nordea in Copenhagen. The International Monetary Fund on Wednesday urged European policymakers to deepen the financial and fiscal ties within the euro area with some urgency. As well as concerns over Spain, investors are fretting about whether Greece will agree terms with its international lenders for the next tranche of funds needed to keep the country afloat.
The Australian dollar meanwhile rose against both the euro and the dollar after a successful sale of Australian long-dated bonds boosted demand. It was up 0.3 percent against the US dollar at $1.0234, while the euro was down 0.4 percent at A$1.2572.