By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar extended its climb in Asian trading Tuesday, getting a lift — particularly against its European counterpart — from concerns about debt problems in the euro zone.
On Monday, Standard & Poor’s Ratings Services cut Greece’s long-term sovereign-credit rating to B from BB-minus. Read more on S&P downgrade of Greece.
The dollar index DXY +0.04% , which measures the greenback against a basket of six currencies, rose to 74.981 from 74.710 in late North American trading on Monday.
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The euro EURUSD -0.0348% slipped to $1.4273 from $1.4349. See real-time currency quotes and tools.
The greenback also got support from sagging oil prices. Crude-oil futures fell after CME Group said it was raising margin requirements for a wide variety of crude-oil contracts, effective Tuesday. See more on crude-oil futures and margin-requirement hike.
The currency moves also came as China reported its trade surplus for April widened far more than analysts had expected, as export growth surged. Read more on China trade data.
“Today’s data show that Chinese exporters continue to benefit from a supportive exchange rate,” said strategists at RBC Capital Markets.
Although the Chinese yuan is posting moderate gains against the U.S, dollar, it’s lost ground against other major currencies, they said, “so in trade-weighted terms China has seen its currency weaken over the last six months or so,” which is “helping to boost its exports, but is also contributing to stronger inflation.”
This data will likely give fodder to U.S. officials calling for Beijing to allow faster currency appreciation, the RBC strategists said, “but more importantly should persuade Chinese policy makers that a stronger [yuan] can be tolerated by the economy and is warranted as part of their efforts to curb price pressures.”
They forecast the dollar to move to 6.40 yuan by the middle of the year and to 6.20 yuan by the end of the year.
On Tuesday, one U.S. dollar bought 6.4939 yuan in currency spot trading. The People’s Bank of China set the dollar’s daily mid-point at a record high of 6.4950 yuan, stronger than Monday’s historical high of 6.4988 yuan.
Against the Japanese yen, the dollar USDYEN +0.4983% rose to ¥80.49 from ¥80.25 late Monday.
The British pound GBPUSD -0.1892% fell to $1.6368 from $1.6390.
The Australian dollar AUDUSD -0.0371% dropped to $1.0743 from $1.0772, ahead of the release of Australia’s federal budget.
The budget was scheduled to be released Tuesday evening, with economists expecting the government to announce austerity measures. Read more on Australian budget.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
