Dollar rises vs euro on Spain, Italy downgrades

AP News
Posted: Oct 07, 2011 4:06 PM
Dollar rises vs euro on Spain, Italy downgrades

The euro's early rally against the dollar ended quickly Friday after a credit ratings agency downgraded the debt of both Italy and Spain.

The euro fell to $1.3388 in late trading Friday from $1.3429 late Thursday. The euro rose as high as $1.3524 earlier in the day after the U.S. released a better-than-expected jobs report.

The euro gave up its gains against the dollar after Fitch downgraded Italy and Spain's sovereign credit rating. Fitch said the long-term outlook for both countries was negative.

"It was a harsh reminder to everyone that the sovereign debt crisis is alive and kicking," said Kathy Lien, director of currency research at GFT.

The downgrades revived fears that Greece's debt crisis could spread to Italy and Spain, the third- and fourth-largest economies in the eurozone, Lien said.

News from the U.S. was more positive. The nation added 103,000 jobs in September, nearly double what analysts had expected. The Labor Department also said that the U.S. added more jobs in July and August than first estimated. The data helped calm fears of another recession.

In other trading Friday, the dollar rose to 0.9266 Swiss franc from 0.9209 franc late Thursday. It also edged up to 76.82 Japanese yen from 76.61 yen and to 1.0394 Canadian dollars from 1.0390 Canadian dollars.

The British pound rose to $1.5553 from $1.5431.