Euro was initially resilient in wake of France’s downgrade By Deborah Levine and William L. Watts, MarketWatch SAN FRANCISCO (MarketWatch)—The dollar turned up on Tuesday as attention shifted back toward Greece after Eurogroup President Jean—Claude Juncker said chances are good that European officials and Athens will come to a solution this evening. The euro only briefly fell after Moody’s stripped France of its triple-A credit rating. The ICE dollar index DXY -0.13% , which measures the greenback’s performance against a basket of six other major currencies, rose to 81.979 from 80.854 in late North American action Monday. The euro EURUSD -0.03% slipped to $1.2799, down from 1.2816 Monday. Versus the Japanese yen EURJPY +0.31% , the shared currency rose to ¥104.58 from ¥104.17. See: Why markets shrug off France downgrade . The Eurogroup gathering is the “major event risk� for markets Tuesday, said Sun Trinh, senior currency strategist at RBC Capital Markets. Euro-zone finance ministers are expected to discuss, among other issues, a contentious proposal to extend the date for Greece to meet a targeted reduction in its debt. “Once an agreement has been brokered—assuming there is also International Monetary Fund acquiescence—then we would expect the Eurogroup to approve disbursement of the next tranche of aid [to Greece],� Trinh said. As for France’s rating, “Moody’s decision to downgrade France’s credit rating to Aa1 from Aaa comes after a widespread press discussion of France’s loss of competitiveness relative to Germany. It won’t have a huge short-term market impact, given the talk that has gone before, and if [the euro] closes about $1.28 today, I can see a spike towards $1.30,� said Kit Juckes, head of foreign exchange at Société Générale. The move, however, does underline some concerns, said Kathy Lien, strategist at BK Asset Management in New York. It shows that the two largest countries in the common currency bloc—the other being Germany—aren’t immune to the stress in the region, she said. Lien said Moody’s assessment that France’s economic growth assumption of 0.8% in 2013 and 2% in 2014 were overly optimistic was “really disconcerting, considering that 0.8% is extremely anemic growth.� Bank of Japan Meanwhile, the yen eventually lost ground after the Bank of Japan left its policy interest rate and the size of its asset-purchase program unchanged, as widely expected in the wake of an expansion to the central bank’s easing moves at its last two meetings. Read: Bank of Japan stands pat but hints at more easing. The U.S. dollar USDJPY +0.34% rose to ¥81.67 from ¥81.38 Monday. The British pound GBPUSD +0.05% changed hands at $1.5921, up slightly from $1.5911, while the Australian dollar AUDUSD -0.34% bought $1.0369, down from $1.0411. Deborah Levine is a MarketWatch reporter, based in San Francisco. William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.

Source