Euro gains against dollar as US concern outweighs Ireland cut
The euro rose against the dollar as concern that the economic recovery may be faltering damped demand for the US currency, outweighing Ireland’s credit downgrade by Moody’s Investors Service.
The single currency erased earlier losses and gained against 13 of its 16 most actively traded counterparts before a report today that will show US house builders turned the most pessimistic in four months in July.
Moody’s today cut Ireland’s rating to Aa2 from Aa1, citing the government’s “gradual but significant loss of financial strength.”
“Ireland’s downgrade is not that important for the European debt crisis,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt.
“Market focus has shifted away from the debt crisis to concerns about the US economic recovery.”
The euro gained 0.4pc against the dollar to $1.2973 as of 9:26am in London, after earlier weakening as much as 0.5pc to $1.2871.
It reached $1.3008 at the end of last week, the strongest level since May 10. The single currency climbed 0.7pc versus the Japanese yen, to 112.70 yen today after falling to 111.44 earlier.
The National Association of Home Builders/Wells Fargo confidence index in the US declined to 16 in July, the least since March, according to a Bloomberg News survey before the report today.