By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — The dollar gained ground against the euro Monday 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 +0.38% , which measures the greenback against a basket of six other currencies, rose to 79.693, from 79.323 in North American trade late Friday.
The WSJ dollar index XX:BUXX +0.30% rose to 69.62 from late Friday’s 69.31.
The euro EURUSD -0.53% fell to $1.2905 from $1.2989 late Friday.
The German Ifo survey of business confidence recorded a sharper-than-expected drop in September.
The fifth-consecutive monthly decline for the Ifo suggests “that the economic slowdown in [the euro zone] precipitated by the crisis in the region’s sovereign debt market is showing no signs of plateauing,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.
The Ifo results were “a clear disappointment to the FX market which was looking for some signs of stabilization in the German economy,” he said in a morning note. 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 -0.31% slipped to $1.6197 from $1.6252 in North America late Friday.
The Australian dollar AUDUSD -0.32% fell to $1.0405 from $1.0451.
However, both the euro and the U.S. dollar weakened against the Japanese yen.
Against the yen USDJPY -0.34% , the dollar changed hands at ¥78.02, down from ¥78.12 Friday. The euro traded at ¥100.71, down from ¥101.43.
“The Japanese yen and the U.S. dollar are leading the majors today as some risk-aversion has taken hold amid broadening concerns out of Europe,” said Christopher Vecchio, currency analyst at DailyFX, in a note.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Virginia Harrison is a MarketWatch reporter based in Sydney. Barbara Kollmeyer in Madrid contributed to this report.
