Investing.com - The greenback rose against the world's major currencies on Tuesday after U.S. ratings agency Moody's downgraded several European nations, dousing appetite for risk fueled by Greece's earlier willingness to embrace austerity in exchange for aid.
Specifically, Moody's downgraded Italy, Portugal, Spain, Slovakia, Slovenia and Malta, and slapped negative outlooks on Austria, France and the U.K., which ups the likelihood the latter three countries could lose their coveted AAA ratings.
In early Asian trading on Tuesday, EUR/USD fell 0.19% to 1.3162.
Greek lawmakers recently voted in favor of accepting austerity measures to gain access to EUR130 billion in assistance funding arranged by the European Union, the European Central Bank and the International Monetary Fund to avoid going bankrupt.
The news sent investors rushing to sell dollars in exchange for other assets worldwide, stocks especially, since it appeared increasingly likely that Greece would make a EUR14.5 billion bond payment due March 20.
The risk-on trading pattern came to an abrupt halt on news that Moody's downgraded a good chunk of Europe.
"Those Moody’s cuts have taken some of the steam out of investor risk appetite and we’re seeing knee-jerk losses, not only in euro, but also the risk-sensitive currencies," said Mike Jones, a foreign-exchange strategist at Bank of New Zealand in Wellington, according to Bloomberg.
"At the same time, we’re seeing broad strength in the yen and U.S. dollar."
Furthermore, market applause for Greek parliamentary approval of austerity measures such as pension reforms and public-sector layoffs had begun to wane just prior to the Moody's announcement.
Meanwhile, the dollar was up against the pound, with Cable falling 0.34% to hit 1.5712.
The greenback was up 0.03% against the yen, with USD/JPY trading at 77.60, and up against the Swiss franc, with USD/CHF gaining 0.15% to 0.9180.
The greenback was up against its counterparts in Canada, Australia and New Zealand, with USD/CAD up 0.18% at 1.0015, AUD/USD down 0.42% at 1.0687 and NZD/USD down 0.45% at 0.8302.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.22% at 79.25.
Later Tuesday, the Bank of Japan is tentatively scheduled to give a press conference to discuss monetary policy.
French nonfarm payroll numbers are due out, while in Germany, the German ZEW Economic Sentiment index will be released.
Market watchers will keep an eye on eurozone industrial output figures and even more so on U.K. inflation data.
In the U.S., retails sales, import price figures and business inventory data will emerge, while Treasury Secretary Timothy Geithner is set to speak.
New Zealand is due to release retail sales data, while in Australia, the Westpac Consumer Sentiment Index will hit the wire.
Specifically, Moody's downgraded Italy, Portugal, Spain, Slovakia, Slovenia and Malta, and slapped negative outlooks on Austria, France and the U.K., which ups the likelihood the latter three countries could lose their coveted AAA ratings.
In early Asian trading on Tuesday, EUR/USD fell 0.19% to 1.3162.
Greek lawmakers recently voted in favor of accepting austerity measures to gain access to EUR130 billion in assistance funding arranged by the European Union, the European Central Bank and the International Monetary Fund to avoid going bankrupt.
The news sent investors rushing to sell dollars in exchange for other assets worldwide, stocks especially, since it appeared increasingly likely that Greece would make a EUR14.5 billion bond payment due March 20.
The risk-on trading pattern came to an abrupt halt on news that Moody's downgraded a good chunk of Europe.
"Those Moody’s cuts have taken some of the steam out of investor risk appetite and we’re seeing knee-jerk losses, not only in euro, but also the risk-sensitive currencies," said Mike Jones, a foreign-exchange strategist at Bank of New Zealand in Wellington, according to Bloomberg.
"At the same time, we’re seeing broad strength in the yen and U.S. dollar."
Furthermore, market applause for Greek parliamentary approval of austerity measures such as pension reforms and public-sector layoffs had begun to wane just prior to the Moody's announcement.
Meanwhile, the dollar was up against the pound, with Cable falling 0.34% to hit 1.5712.
The greenback was up 0.03% against the yen, with USD/JPY trading at 77.60, and up against the Swiss franc, with USD/CHF gaining 0.15% to 0.9180.
The greenback was up against its counterparts in Canada, Australia and New Zealand, with USD/CAD up 0.18% at 1.0015, AUD/USD down 0.42% at 1.0687 and NZD/USD down 0.45% at 0.8302.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.22% at 79.25.
Later Tuesday, the Bank of Japan is tentatively scheduled to give a press conference to discuss monetary policy.
French nonfarm payroll numbers are due out, while in Germany, the German ZEW Economic Sentiment index will be released.
Market watchers will keep an eye on eurozone industrial output figures and even more so on U.K. inflation data.
In the U.S., retails sales, import price figures and business inventory data will emerge, while Treasury Secretary Timothy Geithner is set to speak.
New Zealand is due to release retail sales data, while in Australia, the Westpac Consumer Sentiment Index will hit the wire.