By William L. Watts and V. Phani Kumar, MarketWatch
FRANKFURT (MarketWatch) — The euro retreated Tuesday, giving up gains after Spain’s Treasury minister warned that higher borrowing costs are shutting the country out of financial markets, while traders awaited a conference call by Group of Seven officials expected to focus on the euro-zone debt crisis.
The euro EURUSD -0.4240% traded at $1.2433, down from $1.2493 in North American trade late Monday. The shared currency traded as high as $1.2542 in earlier activity.
In an interview with a Spanish radio broadcaster, Treasury Minister Cristobal Montoro said the high risk premium on Spanish debt “says that as a state we have a problem in accessing markets, when we want to refinance our debt.” Read about Montoro.
Montoro also said Spanish banks don’t need “excessive” amounts for recapitalization, while calling on European institutions to “open up and help us achieve, help facilitate that figure because we’re not talking about astronomical figures,” according to Bloomberg News.
“Although his comments were meant to reassure the market, they had the opposite effect, sending the euro lower by more than 70 points as jittery currency traders viewed Mr. Montoro’s statement as further confirmation that Spain may be headed for credit-crunch disaster,” said Boris Schlossberg, director of currency research at GFT.
G-7 finance ministers and central-bank governors were slated to hold a conference call later Tuesday on the European debt crisis. The G-7 consists of the U.S., the U.K., Japan, Germany, France, Italy and Canada.
However, “the respite looks temporary unless followed by concrete measures out of the euro zone,” he said.
The ICE dollar index DXY +0.33% , which measures the greenback against a basket of six other major currencies, rose to 82.810 versus 82.528 late Monday.
Among other major currency pairs, the British pound GBPUSD -0.16% changed hands for $1.5357, down from $1.5382, while the U.S. dollar USDJPY +0.38% was slightly lower against the Japanese yen at ÂĄ78.23, compared with ÂĄ78.33 late Monday.
The Australian dollar AUDUSD +0.07% trimmed gains versus the greenback after initially gaining ground in volatile action after the Reserve Bank of Australia cut its policy interest rate by a quarter-point to 3.5%. Read more about the RBA decision.
The currency traded at 97.31 U.S. cents, down from 97.54 cents just before the decision was announced, and little changed from its range of around 97.27 cents late Monday.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
However, “the respite looks temporary unless followed by concrete measures out of the euro zone,” he said.
The ICE dollar index DXY +0.33% , which measures the greenback against a basket of six other major currencies, rose to 82.810 versus 82.528 late Monday.
Among other major currency pairs, the British pound GBPUSD -0.16% changed hands for $1.5357, down from $1.5382, while the U.S. dollar USDJPY +0.38% was slightly lower against the Japanese yen at ÂĄ78.23, compared with ÂĄ78.33 late Monday.
The Australian dollar AUDUSD +0.07% trimmed gains versus the greenback after initially gaining ground in volatile action after the Reserve Bank of Australia cut its policy interest rate by a quarter-point to 3.5%. Read more about the RBA decision.
The currency traded at 97.31 U.S. cents, down from 97.54 cents just before the decision was announced, and little changed from its range of around 97.27 cents late Monday.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
