MW: Dollar tops 2-year high on Greece, Spain fears
Euro drops to lowest level against the yen in this millennium
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The U.S. dollar rallied versus most major currencies as Spanish borrowing costs soared into crisis territory and talk of a cutoff to aid for Greece put the euro-zone-debt crisis back on the front burner.
The euro EURUSD -0.17% fell to $1.2079 from $1.2161 in North America late Friday.
The currency touched its lowest level since June 2010, according to FactSet.
The ICE dollar index DXY +0.44% , which measures the greenback against a basket of six major currencies, climbed to 83.953 from 83.457 Friday.
The Japanese yen, like the dollar, is widely considered a safe-haven where investors seek refuge during periods of financial stress.
The euro EURJPY -0.28% dropped to 94.54 yen, after falling as low as ¥94.24, a level that hadn’t been seen since 2000. Late Friday, the European currency bought ¥96.42.
“Risk-off is certainly the dominant theme this morning, and we see little on the horizon this week to change the tide,” said Christian Lawrence, currency strategist at Rabobank International. “Despite a [light data schedule] today, event risk is rife this week and there is much that could boost the flow into perceived-safe-haven assets.”
The shared currency’s losses, which follow Friday’s weak performance, came in the wake of a news report that the International Monetary Fund was set to stop aid for Greece, a decision that could potentially push the debt-stricken European nation into bankruptcy. Read about IMF Greek aid suspension
At the same time, fears about Spain raged on, amid reports that the Valencia and Murcia regions could ask for Madrid’s assistance. (Read more about aid requests from Valencia and Murcia.)
“There has been little in the way of positive press since Friday, and as such, markets have started the week as they finished the last — with a decided air of risk aversion,” said Sue Trinh, senior currency strategist at RBC Capital Markets.
Spanish bond yields soared, with the 10-year yield ES:10YR_ESP +2.98% jumping by around a quarter percentage point to 7.46%, while the two-year yield soared nearly 0.9 percentage point to 6.51%. Yields rise as bond prices fall.
U.K. pound, Japanese yen
The WSJ dollar index XX:BUXX +0.45% , a new benchmark tracking the U.S. unit’s moves against some of the world’s most heavily traded currencies, rose to 72.72 from 72.33 on Friday.
The British pound GBPUSD -0.75% fell to $1.5497 from $1.5619.
The Australian dollar AUDUSD -0.90% traded at $1.0256, down from $1.0382.
Against the Japanese currency, however, the dollar USDJPY -0.11% fell to ÂĄ78.26 from ÂĄ78.47.
The yen held its gains against the dollar and the euro, as well as many other currencies, despite a warning from Japan Finance Minister Jun Azumi that Tokyo would take “decisive steps against speculative movement of excessive volatility.” See more on Japan’s finance minister.
Deborah Levine is a MarketWatch reporter, based in New York.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Varahabhotla Phani Kumar in Hong Kong contributed to this report.
