MW:Dollar rallies; euro sinks on Greek debt concerns
By Polya Lesova and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The U.S. dollar rallied against other major currencies Wednesday, while the euro sank after European officials couldn’t resolve their differences on how to respond to the Greek debt crisis.
The euro EURUSD -0.84% slumped to $1.4303 in morning European trading, down from $1.4463 in late North American trading on Tuesday. See real-time currency quotes and tools.
The losses came after euro-zone officials meeting in Brussels on Tuesday didn’t make progress on agreeing a potential second aid package for Greece.
The divisions are particularly sharp between the approach favored by the European Central Bank and that advocated by German officials over the potential involvement of the private sector in resolving the crisis. The ECB doesn’t support any form of debt restructuring or other moves that could be perceived by the market as default.
“In simple terms, the ECB and France want to avoid a declaration of default, while Germany wants private-sector involvement as the cost of continually asking their taxpayers to bail out Europe’s fiscal miscreants,” said analysts at FxPro in a note.
The situation in Greece continued to deteriorate, with a 24-hour general strike bringing the nation to a halt on Wednesday. The strike has been organized by two major unions in order to protest the government‘s latest austerity measures.
The dollar index DXY +0.66% , which measures the performance of the U.S. unit against a basket of six currencies, rose to 74.945 from 74.354 late Tuesday.
The British pound GBPUSD -0.53% slipped to $1.6277 from $1.6387 late Tuesday.
“The pound is also getting hit as investors avoid risky assets,” said Kathleen Brooks, an analyst at Forex.com. “We expect it to follow the direction of the euro for the coming days until we know more about the final solution to Greece’s debt crisis.”
The Australian dollar AUDUSD -0.05% traded at $1.067, compared with $1.069. Read RBA governor statement
Against the Japanese yen, the dollar USDJPY +0.23% bought ¥80.66, compared with ¥80.49 late Tuesday.
