Euro drops as moody’s cuts portugal debt to junk

The euro fell for the first time in seven days against the dollar after Moody’s Investors Service cut Portugal’s government bond rating to junk and said banks rolling over Greek bonds may incur impairment charges.

The dollar advanced versus most of its major counterparts on speculation China’s efforts to tame inflation and Europe’s sovereign-debt crisis will damp demand for higher-yielding assets. The European Central Bank is forecast by economists to raise interest rates at its meeting this week, and a report may show the U.S. unemployment rate held at 9.1 percent.

“It’s just another reason to sell the euro,” John Doyle, a strategist in Washington at the currency-trading firm Tempus Consulting Inc., said of the Portugal downgrade. “It continues to drill down and reiterate the story that the euro debt crisis is still a huge problem.”

The euro fell 0.8 percent to $1.4429 at 5 p.m. in New York, from $1.4539 yesterday, when it touched $1.4578, the highest level since June 9. The euro dropped 0.4 percent to 116.97 yen, from 117.47. The greenback climbed 0.3 percent to 81.07 yen, from 80.80.

Source: Businessweek.com