Dollar gains against euro ahead of Portugal vote

AP News
Posted: Mar 23, 2011 3:31 PM
Dollar gains against euro ahead of Portugal vote

The U.S. dollar rose against the euro Wednesday as investors awaited a vote on austerity measures in debt-ridden Portugal.

If the opposition party in Portugal rejects the minority government's proposed austerity measures, the government could collapse. If Portugal if forced to seek financial aid it would become the third European country to do so, following Greece and Ireland.

"If they have a change in government, it's more likely we would see them access aid packages," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.

Such a move would be the latest sign for investors that Europe's debt problems might not be easily resolved. The turmoil comes on the eve of a summit where EU leaders plan to complete a crisis-fighting plan.

In late afternoon trading Wednesday, the euro fell to $1.4123 from 1.4207 late Tuesday.

Meanwhile, economic data in the U.S. showed that the housing market was still weak. The Commerce Department said that sales of new homes fell in February to their slowest pace in nearly half a century. The Commerce Department said new-home sales fell 16.9 percent last month to a seasonally adjusted annual rate of 250,000 homes. New-home sales now account for just 5 percent of total home sales so far this year, well below the 15 percent usually seen in healthier housing markets.

In other trading Wednesday, the British pound fell to $1.6246 from $1.6382 late Tuesday. The dollar rose to 0.9081 Swiss franc from 0.9032 Swiss franc, while it fell to 80.86 Japanese yen from 80.91 yen. The dollar rose to 98.06 Canadian cents from 97.93 Canadian dollars late Tuesday.

The U.S. dollar was higher against most currencies around the world, including the Scandinavian currencies, the South Korean won and the Australian dollar.