By William L. Watts, MarketWatch LONDON (MarketWatch) — The U.S. dollar traded modestly higher versus major rivals Monday, advancing on the European single currency after ratings agency Moody’s Investors Service downgraded troubled Irish lender Anglo Irish Bank’s unguaranteed senior debt and subordinated debt. Moody’s said it cut Anglo Irish’s unguaranteed senior debt to Baa3 from A3 and cut its dated subordinated debt to Caa1 from Ba1. Read Market Pulse for more information on the Anglo Irish downgrade. The euro (EURUSD 1.3480, +0.0001, +0.0074%) slipped in the wake of the move to trade at $1.3476 versus the dollar in recent action, down from $1.3486 in North American trade late Friday. The euro ended last week on a strong note after a relatively robust reading from the Ifo German business-climate indicator and U.S. durable-goods data fueled a rise in risk appetite, analysts said. The euro gained 3.3% last week, posting its biggest weekly gain since March 2009, but it remains down 5.9% for the year. Earlier Monday, the European Central Bank said M3 money supply grew 1.1% in August compared with the same month last year, up from a 0.2% yearly rate in July and topping forecasts for a 0.4% rise. Loans to the private sector also picked up steam, rising 1.2% compared with August 2009 and accelerating from a 0.8% yearly pace in July. Davide Stroppa, economist at UniCredit Bank in Milan, said the August figures offered no “meaningful surprises.” The recovery in growth of money and credit to the private sector seems to proceed, the latter being well-supported by the pickup in household lending and by progressive improvements in corporate lending,” Stroppa said. “Nevertheless, as credit developments remain rather contained, the risks of inflationary pressures stemming from the monetary channel remain indeed limited.” The dollar index (DXY 79.28, -0.11, -0.14%) , a measure of the U.S. unit against a basket of major rivals, traded at 79.388, up slightly from 79.333. The dollar (USDYEN 84.2400, -0.0700, -0.0830%) traded at 84.18 yen, down from ¥84.34 late Friday. Meanwhile, a senior Chinese official said U.S. congressional action designed to push China to upwardly revalue its yuan would be ineffective and that Beijing would set its currency according to its own needs, according to a report Monday. “We’ll make a decision based on our own economic development levels and the world economic situation,” Vice Commerce Minister Chen Jian said, according to Reuters. “If it takes the yuan to appreciate for our economy to develop, we will do it, even though it would have a negative impact.” The People’s Bank of China fixed the midpoint of the U.S. dollar’s daily trading range at 6.7098 yuan, up from the previous trading session level of 6.6997 yuan. The setting comes after nine straight sessions in which the yuan was set at a rate that represented new highs for the Chinese currency versus the dollar. The Ways and Means Committee of the U.S. House of Representatives on Friday cleared legislation that would impose duties on goods from countries with currencies deemed to be undervalued. South Korean authorities bought dollar Monday to curb the won’s rise after it hit a fourth-month high versus the dollar, news reports said. The U.S. dollar bought 1,147.7 won, after falling as low as 1,146.0 in earlier action, its lowest level since mid-May. The central bank was said to have entered the market around the 1,148.0 won level and may have bought between $500 million and $700 million. Read about the Bank of Korea’s intervention effort. The British pound (GBPUSD 1.5845, +0.0030, +0.1897%) traded at $1.5845 versus the dollar, up 0.1% on the day.

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