The euro fell the most in almost a month against the US dollar as Moody’s Investors Service cut Portugal’s government bond rating to junk and European banks faced more stringent stress tests.
The Swiss franc rose this week against all of its major counterparts as Europe’s debt crisis spurred demand for a refuge. The US dollar fell against the yen for the first time in three weeks after the US payrolls report showed employers added the fewest jobs in nine months.
“The headline event for this week was the four-notch downgrade to Portuguese debt by Moody’s,” said Ravi Bharadwaj, a market analyst in Washington at Travelex Global Business Payments, a currency-exchange network. “It seems like a lose-lose situation for the euro-dollar right now.”
The 17-nation euro fell 1.8 percent to US$1.4265, from US$1.4526 on July 1, after touching US$1.4206 on Friday, the lowest since June 27. The drop in the currency is the biggest since the five days ended June 10, when it fell 2 percent. The euro slid 2 percent to ￥115.03, from ￥117.42. The US dollar slumped 0.2 percent to ￥80.64, from ￥80.83.
“This is a huge splash of cold water onto the markets with what we’ve seen with the jobs report,” Mark McCormick, a New York-based currency strategist at Brown Brothers Harriman & Co. “The US economy is still experiencing sluggish growth. It just shows how bad the mini-slowdown we’ve had has been.”
The Swiss franc, which benefits in times of turmoil from Switzerland’s role as a stable, neutral financial center, appreciated 3.2 percent to SF1.1933 against the euro. The franc rallied to a record SF1.1806 versus the shared currency on June 24.
Sterling strengthened against the euro for the first week in three as signs the euro-region’s debt crisis is worsening boosted buying of alternatives to the shared European currency.
Sterling gained 1.8 percent this week to ￡0.8881 per euro. The pound fell 0.4 percent to US$1.6017, after falling to as low as US$1.5932 on Friday, the weakest intraday level since June 28. It lost 0.5 percent to ￥129.44.
ASIA
Asian currencies rose for a second week, led by Thailand’s baht, on speculation the world’s fastest economic growth and rising interest rates will spur more fund inflows from abroad.
The baht posted its biggest five-day advance since December 2008 as overseas investors increased holdings of local assets after the Pheu Thai party won a clear majority in elections last weekend, reducing the scope for political unrest. China raised borrowing costs on Wednesday and the Bank of Thailand is expected to do so next week. Global funds pumped about US$1.6 billion into South Korean, Thai and Indonesian equities in the first four days of the week, exchange data show.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, rose 0.3 percent this week, touching a 14-year high of 119.40 on Friday.
The baht this week climbed 1.9 percent to 30.24 per US dollar, the Philippine peso strengthened 1 percent to 42.745 and South Korea’s won advanced 0.9 percent to 1,057.08, according to data compiled by Bloomberg.
The New Taiwan dollar snapped a three-day loss on Friday and government bonds declined as a rebound in US jobs boosted optimism about the global economic recovery. Asian markets closed before the US Labor Department reported that unemployment increased to 9.2 percent.
The NT dollar has retreated from a one-month high reached earlier in the week as government data showed growth in Taiwan’s exports missed analysts’ estimates.
The NT dollar slipped 0.1 percent to NT$28.795 for the week.
Elsewhere, Malaysia’s ringgit gained 0.5 percent this week to 2.9948 per US dollar, Indonesia’s rupiah strengthened 0.2 percent to 8,520 and the Singapore dollar advanced 0.6 percent to S$1.2195. India’s rupee appreciated 0.6 percent to 44.3280.
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