By Polya Lesova and Sarah Turner, MarketWatch
LONDON (MarketWatch) — The U.S dollar gained against major rivals on Monday, while the euro fell as investors avoided assets perceived as risky on renewed concerns about the euro-zone sovereign-debt crisis.
The U.S. dollar index DXY +0.84% , which tracks the performance of the greenback against a basket of other major currencies, rose to 79.177 from 78.622 in late North American trading on Friday.
The euro EURUSD -1.02% fell to $1.3263, compared with $1.3370 in late trading Friday.
The dollar index had fallen on Friday after euro-zone leaders said that they would forge closer fiscal ties via an inter-governmental accord. However, doubts emerged Monday about whether Friday’s agreement does much to address the short-term challenges posed by the debt crisis.
“While fiscal union is laudable and it is definitely a positive step for future euro-zone debt dynamics, what we’re missing were steps to deal with today’s (sizable) debt problem,” said Kathleen Brooks, research director at Forex.com.”The politicians seem to be focused on preventing a future debt crisis — what about dealing with the one on the doorstep first?”
Ratings firms weigh in
Further hurting sentiment, Moody’s Investors Service said on Monday that it still intends to revisit the ratings of all European Union countries during the first quarter of 2012 given “the continued absence of decisive policy measures.”
Standard & Poor’s Ratings Services also warned last week that it may downgrade the ratings of 15 euro-zone nations including France and Germany due to the lack of a solution to the debt crisis.
“We are unlikely to see a step change in European Central Bank bond purchases in the short term,” said Sue Trinh, strategist at RBC Capital Markets. “This makes it more likely than not that Standard & Poor’s will carry out its threat to downgrade some euro-area member states in the coming days.”
In other trade, the British pound GBPUSD -0.24% was at $1.5622, compared with $1.5659 in late trading Friday.
The U.S. dollar USDJPY +0.25% gained against the Japanese yen, which can also be regarded as a safe haven. The dollar bought 77.80 yen, compared with ÂĄ77.50 in late trading Friday.
Polya Lesova is chief of MarketWatch’s London bureau.
Sarah Turner is MarketWatch's bureau chief in Sydney.
