By William L. Watts and Lisa Twaronite, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar extended gains versus major rivals Wednesday after China’s central bank delivered a rate hike that had been expected to take place this weekend.
The dollar index DXY +0.55% , which measures the greenback’s performance against six other currencies, rose to 75.013, compared with 74.661 late Tuesday.
The euro EURUSD -0.68% fell to $1.4333 from $1.4419 in late North American trading on Tuesday. See real-time currency quotes and tools.
The euro had slumped in U.S. action Tuesday, after Moody’s Investors Service downgraded Portugal’s long-term government bond ratings to Ba2, or junk status, from Baa1, rekindling fears about Europe’s sovereign-debt situation in the wake of Greece’s own struggle to get its parliament to pass an austerity plan.
After a bout of short covering in Asian activity, the euro came back under pressure and extended losses as the move by the People’s Bank of China undercut risk appetite, putting added pressure on European stocks, U.S. stock futures and currencies such as the euro that tend to benefit when shares and other risky assets rise.
The Australian dollar AUDUSD -0.25% , which also tends to rise when risk appetite increases, turned lower versus the U.S. unit to fetch $1.0662, down from $1.0692 late Tuesday.
China’s central bank boosted its lending and deposit rates by 25 basis points on Wednesday, the third hike this year. The move, effective Thursday, brings the benchmark one-year lending rate to 6.56% and the one-year deposit rate to 3.5%, according to a statement published on the PBOC’s website.
