By William L. Watts and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The U.S. dollar gained ground Thursday as oil prices retreated and Moody’s Investors Service downgraded Spanish government debt, adding to mounting worries over debt problems on the periphery of the 17-nation euro zone.
Moody’s cut the rating one notch, to Aa2 from Aa1, saying it fears the restructuring of the nation’s banks will cost more than the government estimates. The agency also doubts the government can improve its public finances given its limited control over the fiscal decisions of regional governments. Read about Moody's downgrade of Spain.
The dollar index (DXY 77.19, +0.47, +0.61%) , a measure of the U.S. unit against a basket of six major currencies, rose to 77.008 from 76.702 late Wednesday.
The dollar also got a lift from worse-than-expected trade data from China, which posted an unexpected trade deficit for February. Read more on China trade deficit.
“Distortions from the Lunar New Year holiday were partly to blame, but the damage was done,” said Sue Trinh, senior currency strategist at RBC Capital Markets, in a note to clients.
The data raised fears about the strength of global demand, and risk-averse investors tend to seek lower-yielding currencies for their perceived safe-haven appeal.
Against the Japanese yen, the dollar (USDYEN 83.1400, +0.3100, +0.3747%) bought ¥82.96, compared with ¥82.77 late Wednesday.
Against the Canadian dollar, the U.S. dollar (USDCAD 0.9712, +0.0032, +0.3305%) lately bought 97.03 Canadian cents, compared with 96.90 cents late Wednesday, when the dollar fell to its lowest level against the loonie since November 2007. See more on Canadian dollar.
New Zealand’s currency (NZDUSD 0.7344, -0.0026, -0.3530%) slipped 0.1% to 73.51 U.S. cents after the Reserve Bank of New Zealand cut its key cash rate by half a percentage point to help an economy shaken by two large earthquakes in less than six months. Read more on New Zealand rate cut.
The kiwi appeared to soar briefly against the U.S. dollar after an erroneous trade was placed on the EBS trading system, Dow Jones Newswires reported, citing an unidentified person familiar with the situation.
The New Zealand dollar briefly spiked to US$1.0057 against the dollar before snapping back to 73.44 cents, the report said.
