MW: U.S. dollar continues climb on European debt woes
By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) — The U.S. dollar edged higher in Asian trading Tuesday, finding support as investors continued to fret over the potential for a larger debt crisis in Europe.
The dollar index (DXY 78.95, +0.27, +0.34%) , which tracks the performance of the greenback against a basket of other major rivals, rose to 78.840, up from 78.611 late Monday in North American trading.
In early afternoon trading in Asia, one euro (EURUSD 1.3548, -0.0068, -0.4993%) bought $1.3573, down from $1.3629 late Friday.
The dollar had also climbed against the euro on Monday, with Ireland facing a credit-ratings downgrade. See Monday’s currencies story.
The U.S. dollar strength against major currencies is “a sign that investors are nervous about the consequences of Ireland’s decision to receive financial aid,” Kathy Lien, director of currency research at GFT, said in a note to clients issued late Monday in New York.
“For Ireland, the decision has opened up a can of worms. Rating agency Moody’s warned that the country could face a multi-notch downgrade, while the Green Party confirmed their plans to leave the government after approving the 2011 budget and the aid package,” she said.
But “the real reason why Ireland’s announcement triggered more concern amongst investors than relief is because of contagion,” she said, explaining that “the focus shifted quickly to Spain and Portugal, as investors wondering whether they would suffer the same fate as Ireland.”
The dollar (USDYEN 83.4200, +0.1300, +0.1561%) was little changed against the Japanese yen, trading at 83.33 yen versus ¥83.26 late Monday. See more currency tools.
