Investing.com - The U.S. dollar edged modestly lower against its major counterparts in Asian trade Wednesday, following the downgrade to Spain’s credit rating and reports of an agreement to expand Europe’s rescue fund for ailing euro-zone economies.
In mid-day Asian trade, the greenback was down against the euro, with EUR/USD rising 0.16% to hit 1.3776.
On Tuesday, Moody’s Investors Service reduced Spain’s investment grade to A1 from AA2, with a negative outlook. On October 14 Standard & Poor’s downgraded Spain’s rating, following a Fitch Rating’s cut of Spain to its fourth highest investment grade on October 7.
Moody's also put France on three months notice saying that "pressure from weaker debt metrics," could leave the country with a negative credit outlook and may even result in a downgrade.
Reports that Germany and France had agreed to raise the EFSF to EUR2 trillion were vehemently denied by officials, while German Chancellor Angela Merkel said that the European Union summit in five days would mark an “important step” but not the final one in addressing the region’s debt crisis.
In the U.S., the Bureau of Labor Statistics reported that producer price inflation more by a seasonally adjusted 0.8% in September, up from a flat reading in August, and higher than market expectations of 0.2% for the period.
U.S. stocks got a lift from the reported agreement between France and Germany to boost the EFSF, with the Dow Jones Industrial Average gaining 1.58%, the Nasdaq Composite Index rose 1.63%, and the S&P 500 added 2.04%.
Meanwhile, the greenback was lower against the British pound, with GBP/USD up by 0.09% to hit 1.5729.
The dollar was lower against both the Japanese yen and the Swiss franc with USD/JPY down 0.18% to hit 76.68, and USD/CHF down by 0.12% to hit 0.8976.
The greenback was mixed against its Canadian, Australian and New Zealand counterparts with USD/CAD down 0.06% to hit 1.0133, AUD/USD higher by 0.01% to hit 1.0264, and NZD/USD falling 0.13% to hit 0.7947.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.05% at 77.26.
The U.S. Bureau of Labor Statistics was scheduled to release its monthly consumer price index report later on Wednesday.