Forexpros – The U.S. dollar remained modestly lower against its major counterparts on Wednesday, but the euro trimmed gains against the greenback after ratings agency Fitch cut Portugal’s credit rating to junk status.
During European afternoon trade, the dollar was down against the euro, with EUR/USD rising 0.17% to hit 1.3363.
Fitch downgraded Portugal’s sovereign rating to BB+ from BBB-, saying it expects gross domestic product to contract by 3% in 2012, making the government’s deficit reduction plan far more challenging to execute.
The euro strengthened earlier after a report showing that German business confidence improved unexpectedly in November, indicating that the euro zone’s largest economy is coping with the region’s debt crisis better than experts had feared.
The data came a day after the least successful German bond sale since the launch of the single currency sparked concerns over sovereign debt contagion to core euro zone economies.
The greenback was almost unchanged against the pound, with GBP/USD inching up 0.02% to hit 1.5528.
In the U.K., revised data showed that gross domestic product expanded by 0.5% in the third quarter and was up 0.5% on the year, in line with initial estimates earlier this month and with economists’ forecasts.
The greenback was weaker against the yen and the Swiss franc, with USD/JPY sliding 0.31% to hit 77.06 and USD/CHF shedding 0.27% to hit 0.9175.
Earlier in the day, Switzerland’s President Micheline Calmy-Rey said the overvaluation of the Swiss franc posed a serious threat to the economy and carried the risk of deflation and added that the Swiss National Bank was committed to “a substantial and lasting weakening of the franc.”
Elsewhere, the greenback was broadly lower against its Canadian, Australian and New Zealand cousins, with USD/CAD shedding 0.42% to hit 1.0442, AUD/USD adding 0.77% to hit 0.9764 and NZD/USD climbing 0.56% to hit 0.7442.
In Australia, central bank Governor Glenn Stevens defended the bank’s policy decisions over the past year, saying they were the right calls, but said more time is needed to see if he is right.
The Reserve Bank of Australia cut rates in November, despite the country experiencing the biggest commodity price boom in a decade.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.28% to hit 79.08.
Later Thursday, German, French and Italian leaders were to meet to discuss ways to deal with the euro zone’s worsening financial troubles. Meanwhile, markets in the U.S. were to remain closed for the Thanksgiving holiday.
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