Dollar strengthens versus euro on Greece downgrade

AP News
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Posted: Jun 01, 2011 4:39 PM
Dollar strengthens versus euro on Greece downgrade

The euro gave up its gains against the dollar late Wednesday after ratings agency Moody's downgraded Greece's credit rating yet again.

Moody's announced Wednesday that it was downgrading Greece's credit rating further into junk status, citing an increased risk that the country will need to restructure its debt. The move added to jitters about the country's ongoing debt crisis, said Camilla Sutton, chief currency strategist at Scotia Capital.

A review of Greece's accounts by experts from the European Union, International Monetary Fund and the European Central Bank is expected later this week. It is likely to show that Greece is going to need even more low-cost loans to keep its country running. The country received a package of 110 billion euros ($157 billion) in rescue loans last year.

The euro fell to $1.4374 Wednesday in New York from $1.4378 late Tuesday. Earlier, the euro had traded as high as $1.4458 after several U.S. economic reports increased worries about a slowdown in economic growth.

A private-sector jobs U.S. report showed businesses adding far fewer jobs in May than economists had expected _ 38,000, down from 177,000 in April. It was the smallest jobs gain from payroll processor ADP since September and was likely to dial down expectations for the government's May jobs report, due out Friday.

The Institute for Supply Management's manufacturing report showed the factory sector expanding at the slowest pace in 20 months. Manufacturers are having more trouble dealing with rising prices for energy and raw materials, the survey said. Meanwhile, the government said that spending on home construction remained near its lowest level in more than a decade in April. Spending increased 0.4 percent.

In other trading Wednesday, the dollar fell to $1.6360 British pounds from $1.6448 late Tuesday and fell to 80.97 Japanese yen from 81.50 Japanese yen.

The dollar rose to 97.48 Canadian cents from 96.88 Canadian cents, but fell to 0.8424 Swiss franc from 0.8532 Swiss franc. The dollar touched its latest record low against the Swiss franc, which investors perceive as a safe-haven currency. The franc tends to benefit from fears of slowing global growth or periods of geopolitical tensions.