By Virginia Harrison, MarketWatch
LONDON (MarketWatch) — The dollar extended gains against most major currencies in European trading on Tuesday, as investors absorbed more negative Europe news flow, while some improving data from China helped other risk-tied units.
Moody’s Investors Service put Germany, the Netherlands and Luxembourg on credit watch negative after the U.S. market close Monday. Read more on the Moody's downgrades.
The developments inflamed already tender European wounds, as worries that new regions in Spain may require fresh financial aid stirred on Monday. A report suggesting the International Monetary Fund could cutoff aid to Greece added to concerns.
“Moody’s announcement…may prove to be the catalyst that causes the recent risk-off trends to persist,” strategists at BNP Paribas said.
The euro EURUSD -0.08% slipped to $1.2116, from $1.2133 in North America late Monday.
The purchasing managers index for the euro zone stayed unchanged in July, signaling a sixth straight month of contracting private-sector activity across the region. Euro-zone July PMI unchanged at 46.4
The British pound GBPUSD -0.02% inched lower to $1.5494, from $1.5523 in North America late Monday.
The ICE dollar index DXY +0.03% , which measures the greenback against a basket of six major currencies, climbed to 83.747, from 83.640 in North America late Monday.
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Polish banking sector defies economic gloom
As financial turmoil engulfs much of Europe, Poland's banking sector is a relative oasis of calm. Dow Jones's Patryk Wasilewski speaks to the CEO of PKO Bank Polski, Zbigniew Jagiello.
Against the Japanese currency, the dollar USDJPY -0.22% edged down to ÂĄ78.14, from ÂĄ78.38 in North American trade late Monday.
Meantime, China welcomed some positive data as HSBC reported that its initial monthly reading of the nation’s manufacturing activity hit a five-month high, though the sector remained in contraction. Read more on China's HSBC flash PMI.
The result gave the Australian dollar AUDUSD +0.29% a mild boost, with the risk-sensitive unit trading at $1.0289, from $1.0279 in North America trading late Monday.
Virginia Harrison is a MarketWatch reporter based in Sydney.
