RTTN: Dollar At Highest Since September Versus Sterling
(RTTNews) - The dollar continued its recent advance against the sterling and held its ground versus other major currencies on Tuesday, as Europe struggled to cope with lingering sovereign problems.
Growth prospects remain grim for much of Europe including the UK, as governments have been compelled to adopt severe austerity measures to placate bond markets.
Still, borrowing costs remain elevated for profligate nations, causing large competitiveness gaps within Europe, particularly between robust Germany and its debt-plagued southern neighbors.
Even with the US recovery stagnating, the dollar has strengthened against the euro and sterling in recent weeks.
For a second day in a row, there is little economic news to consider from the United States, leaving all eyes on Europe.
The buck rose to its highest since early September against the sterling, hitting $1.5452. The dollar has picked up almost a nickel in the past six days.
There was little movement for the buck against the euro and yen. The dollar stayed within a penny of yesterday's 3-week high of $1.3093 against the euro.
Ratings agency Moody's on Tuesday warned Portugal of a possible downgrade to its A1 credit rating, citing rising fiscal uncertainties.
The agency said Portugal's ratings could be lowered by a "notch or two" if the country's debt afford ability deteriorates or the economic outlook worsens due to austerity measures.
Last week, Spain and Belgium were warned of possible rating cuts, while the Irish Republic's credit rating was slashed by five notches by Moody's.
The dollar remained sideways near Y83.70 against the yen.
Tame inflation data from Canada gave the dollar a boost against the loonie. With annual inflation in Canada coming in at just 2%, the dollar kept yesterday's strong gains to fetch C$1.02.
