FX round-up: Dollar up as EU debt fears return

The dollar extended its advance against the euro and other major currencies on Tuesday as markets turned focus to sovereign debt problems among some euro zone members.

The euro had been rising against the dollar after European Central Bank president Jean-Claude Trichet signalled that interest rates could rise in the coming months following comments from about curbing inflation pressures.

Investors also mulled robust economic data from Germany. German factory orders rose 2.9% (seasonally adjusted) in January after sliding a revised 3.6% in December. The January gain was stronger than the 2.5% the market had been expecting, and was driven by domestic demand.

Easing oil prices also helped dollar gains as concern over turmoil in Libya came off the boil.

The dollar was up against the yen and the pound. Sterling however came off a five week low against the euro as sovereign debt worries put the single currency under pressure.

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