The euro declined to a one-week low against the dollar a day after Portugal became the second nation in the currency region after Greece to receive a junk credit rating from Moody’s Investors Service.
The New Zealand dollar gained versus the greenback after the Pacific Tsunami Warning Center canceled a tsunami warning for the South Pacific nation after an earthquake. The Swiss franc, yen and dollar rose against most of their major counterparts as Europe’s sovereign-debt crisis and China’s decision to increase interest rates spurred demand for a refuge.
“The markets did not digest the downgrade of Portugal to junk status all too well,” said Jessica Hoversen, an analyst at the futures broker MF Global Holdings Ltd. in New York. “Now you have two major European economies regarded as junk by Moody’s. There are contagion fears.”
The euro dropped 0.8 percent to $1.4319 at 5 p.m. in New York, from $1.4429 yesterday, after touching $1.4286, the lowest level since June 28. The euro slid 1 percent to 115.86 yen, from 116.97, after sliding as low as 115.55. The U.S. currency fell 0.2 percent to 80.91 yen, from 81.07.
ECB Outlook
The European Central Bank will increase its main refinancing rate to 1.50 percent tomorrow from 1.25 percent, according to all 55 economists in a Bloomberg News survey. Swaps traders are betting the ECB will raise its target rate by 76 basis points over the next 12 months.
China is raising benchmark interest rates for the third time this year after inflation accelerated to the fastest pace since July 2008. The one-year deposit rate will rise to 3.5 percent, the People’s Bank of China said on its website today. The move may fuel concern that monetary tightening will trigger a slowdown in the world’s second-biggest economy.
To contact the reporter on this story: Catarina Saraiva in New York Read More
Kamis, 07 Juli 2011
Euro Drops to One-Week Low Versus Dollar on Concern Debt Crisis to Worsen - Bloomberg
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