By Virginia Harrison and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — The dollar ramped up gains during European trading hours Monday, pushing higher against the euro on global-growth worries and as financial troubles in Greece and Spain fanned fears about the debt-stricken currency bloc.
The ICE dollar index DXY +0.32% , which measures the greenback against a basket of six other currencies, rose to 79.517, from 79.323 in North American trade late Friday.
The WSJ dollar index XX:BUXX +0.30% rose to 69.63 from late Friday’s 69.31.
The euro EURUSD -0.4797% tumbled to $1.2906 from $1.2989 late Friday.
German business confidence
The German Ifo survey of business confidence recorded a sharper-than-expected drop in September, marking the fifth straight monthly fall.
“The data also raised fears that Germany could enter a recession by early next year, pressuring the euro currency against the dollar,” said Ishaq Siddiqi, market strategist at ETX Capital, in a note to investors. Read: Ifo business-confidence index dips further in September
Other troubles in Europe were also providing some downward pressure for the euro.
“Risk has been on the back foot this morning after the initial optimism on an imminent Spanish bailout seems to have come closer to the reality we expect,” said Richard Kelly, head of European Rates and FX Research, at TD Securities, in a research note.
Reports last week said the country was working on a package of economic reforms and could apply for a international bailout as early as this week. Read Spain: What investors need to know
Kelly said budget and economic measures due to be announced later this week “represent the first possible time Spain could request official support, but that does not make it the most likely timing. For that, the risk is we still see them delay the request into the second half of October.”
Rajoy’s decision
Meanwhile, a member of Germany’s governing coalition said Monday that Spanish Prime Minister Mariano Rajoy must decide on whether the country needs a bailout.
The fact that Rajoy isn’t spelling out the situation clearly means he “evidently has a communication problem. If he needs help, he must say so,” said Michael Meister, the chief whip and finance spokesman for Chancellor Angela Merkel’s Christian Democratic Union, in an interview with Bloomberg on Monday.
Greece was back in the spotlight Monday following weekend reports, denied by the government, that the country must close a budget shortfall nearly double previous estimates to satisfy international conditions for emergency aid. Read: Greece denies €20 billion budget shortfall
There were also separate reports that French Prime Minister Jean-Marc Ayrault said Greece could be given more time to meet the goals imposed by its international creditors. See: French PM says Greece may get more time.
The British pound GBPUSD -0.18% slipped to $1.6197 from $1.6252 in North America late Friday.
The dollar was weaker against the Japanese yen USDJPY -0.18% , changing hands at ÂĄ78.06, down from ÂĄ78.12 Friday.
The Australian dollar AUDUSD -0.41% fell to $1.0397 from $1.0451.
Virginia Harrison is a MarketWatch reporter based in Sydney.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
