Weak US reports, Greek debt crisis boost dollar

AP News
Posted: Jun 23, 2011 4:36 PM
Weak US reports, Greek debt crisis boost dollar

The dollar rose Thursday against most major currencies after weak U.S. jobs and housing data underscored the recent slowdown in the economy. Anxiety about Greece's debt crisis also helped boost the dollar.

The U.S. economy is the largest in the world. Weaker growth here can hurt the global economy. When investors feel anxious about a slowdown in global growth, they tend to bet on currencies that they consider less risky, such as the yen, Swiss franc and the dollar.

The dollar built on Wednesday's gains against the euro and British pound. In late afternoon trading Thursday, the euro fell to $1.4208 from $1.4376 late Wednesday. The pound fell to $1.5987 from $1.6085. The dollar rose to 80.58 yen from 80.32 yen.

Federal Reserve Chairman ben Bernanke on Wednesday said the economy was growing more slowly than the central bank had expected, but he said the Fed did not plan a new bond-buying program to support the economy. Such a program, if enacted, would likely weigh on interest rates, weakening the dollar's appeal to investors.

On Thursday government reports highlighted Bernanke's concerns about the housing market and jobs. The Labor Department said applications for unemployment benefits rose by 9,000 to 429,000 last week, the biggest rise in a month. That means more people are seeking help after being laid off from their jobs. Separately, the Commerce Department said that sales of new homes fell 2.1 percent in May to 319,000.

The debt crisis in Europe also weighed on the euro. European Central Bank Jean-Claude Trichet said that the Europe's debt problems could spread beyond the continent. If Greece can't implement austerity measures, the European Union and International Monetary Fund have threatened to withhold a batch of emergency loans due in July and Greece could default if it doesn't get the aid. That could set off a European banking crisis and affect other countries with debt woes, such as Ireland, Portugal and Spain.

In other trading Thursday, the dollar rose to 97.99 Canadian cents from 97.23 cents. Meanwhile, the dollar dipped to 0.8388 Swiss franc from 0.8392 Swiss franc.