In recent trading activity, the euro slid more than 1 percent against the dollar on mounting concerns that Greece will be forced to restructure its debt.
Rampant risk aversion generally weighed on the euro zone’s single currency even as Standard & Poor’s revised its outlook on the United States’ long-term rating to negative from stable but affirmed its ‘AAA/A-1+’ sovereign credit rating. An actual ratings downgrade of U.S. debt would be negative for the U.S. dollar, but most believe S&P’s announcement was a warning and, therefore, it did little to rattle the greenback’s performance against the euro.
In day trading, the euro then rebounded against the dollar as strong economic data reassured markets about growth in major euro zone countries even as fears that Greece may have to restructure its debt persist.
The data showing April business activity in Germany and France outpaced the 15 other euro-zone countries helped drive up the euro. The health of bigger euro zone countries suggest interest rates in the bloc, which rose this month, could rise again to counter price pressure, increasing the euro’s appeal.
Also in forex trading, the dollar then plummeted against major and emerging market currencies as the prospect that U.S. interest rates would remain at record lows encouraged investors to seek higher returns elsewhere.
Currencies that benefit from higher commodities trading prices outperformed, with the Australian dollar at a post-float high and the Canadian dollar hitting a 3-1/2-year high.
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