The dollar hit a record low against the Swiss franc Tuesday on concerns about a slowdown in global economic growth. It rose against most of the world's other currencies as investors sought safety.
The Swiss franc is considered a safe-haven currency and tends to gain when investors fear weaker economic growth or financial crises. The dollar, the world's biggest reserve currency, tends to benefit from the desire for safety as well.
"Investors remain cautious and are becoming increasingly concerned by the recent soft patch of data releases from around the world," said UBS currency analyst Chris Walker in a research note.
The dollar fell to a record low of 0.7640 Swiss franc Tuesday. It was worth 0.7678 by late afternoon, still sharply down from 0.7816 Swiss franc late Monday. The Swiss franc has soared about 22 percent this year against the dollar. It's also trading at record highs against the euro, and is up nearly 15 percent versus the currency used by 17 European countries.
The franc has climbed against the dollar and the euro this year because of concerns about slow growth and high debt.
In the U.S., fears that U.S. lawmakers would not be able to agree on a deal to raise the U.S. borrowing limit, and that the country could default on its debts, recently pushed up the franc and the yen against the dollar. On Tuesday, after months of negotiations, President Barack Obama finally signed legislation raising the debt ceiling and planning budget cuts to trim the deficit.
Investors still worry that ratings agencies may downgrade the Triple-A U.S. credit rating, which could make it more expensive for the government and for U.S. consumers and businesses to borrow.
"Rating agency behavior is getting harder and harder to predict as the crisis wears on, and we think the markets at this point are resigned to a U.S. downgrade by at least one of the agencies," said Brown Brothers Harriman currency analyst Win Thin.
A downgrade could worsen the country's recent economic slowdown. Data released this week point to weak growth. The U.S. has the world's largest economy, and it is heavily geared to consumer spending. Tepid growth and the burden of high unemployment can limit spending, which in turn hurts the economies of other countries that export goods to the U.S.
On Tuesday the Commerce Department said consumer spending fell 0.2 percent in June, the first time it has dropped in nearly two years. A separate report on Monday showed that U.S. manufacturing in July had the weakest growth in two years.
The euro was worth $1.4201, down from $1.4265 late Monday. Investors are concerned that Italy and Spain could still be dragged into the European debt crisis, despite last month's agreement to strengthen the eurozone's bailout fund. Yields on both Italian and Spanish 10-year bonds rose to their highest level on Tuesday since the euro was established in 1999. Spanish borrowing costs rose to levels similar to those seen in Greece, Portugal and Ireland before they were forced to ask for large financial aid packages from other European countries.
The larger economies of Italy and Spain would be much more expensive for Europe to aid.
In other trading Tuesday, the British pound was nearly unchanged at $1.6297 from $1.6296, while the dollar ticked up to 95.86 Canadian cents from 95.65 Canadian cents. The dollar jumped against the Australian dollar, the Scandinavian currencies, and several emerging-market currencies.
The dollar also rose to 77.22 Japanese yen from 77.07 yen on speculation the Japanese government will intervene to weaken its currency. On Monday the dollar fell to a post-World War II low of 76.27 yen.
A stronger yen hurts Japan's economy, because it makes the country's exports less competitive around the world. That hurts profits of big exporting companies like Sony and Toyota.