The Euro dropped by 0.7% against the Dollar, its lowest value in the last 7 weeks. The reason for this was the downgrading of the credit rating of Belgium from AA+ to AA, by Standard & Poor, which topped up the day that had already been full of negative news. In European trading, the Euro dropped following the bond yield of Italy reaching an all-time high due to a poor bond auction. Reuters has also reported that Greece has demanded larger losses to be accepted by private investors on the sovereign debts, greater than the 40% initially agreed upon. In North American trading, EUR/USD came down to 1.3220 following news of the downgrading of Belgium, from a level of 1.3296 earlier in the day. In the week overall, Euro has declined 2.4% against the Dollar.
The US Dollar reached its strongest level in the last 7 weeks as risk aversion pushed investors into its safe haven. The Dollar index that monitors the performance of the Dollar against a basket of 6 currencies rose by 0.7% from 79.151 to 79.688. The British Pound had an initial rise of 0.2% against the Dollar in early trading at New York reaching $1.5517 but dropped back to 1.5432 in the aftermath of the negative sentiments in Europe.
The Dollar grew by 0.9% against the Yen reaching 77.78 in US trading. Yen declined today following comments by Azumi, the Japanese Finance Minister, who stated that he could intervene again for curving the strength of the Yen. Dollar reached 8 month high levels versus the Swiss Franc, moving to 0.9329. There is growing speculation that Swiss National Banking authorities could increase the ceiling for the Euro against the Swiss Franc from its present level of 1.20 for curbing its currency strength.
The Canadian Dollar was at its 7 week lowest against the USD as investors were terrified that the Euro market debt crisis would have global implications, thereby reducing demand of commodities. Canadian dollar has been a commodity-linked currency as Canada, being a major exporter of oil, remains sensitive to oil price changes.