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The euro declined after a downgrade to Ireland’s credit rating added to concern Europe’s debt crisis may spread.
The 16-nation currency fell against 13 of its 16 most- traded counterparts as Fitch Ratings reduced Ireland’s rating by three notches and the nation’s government planned a vote on an 85 billion-euro ($114 billion) aid package. The Dollar Index rose for a fourth day after the number of workers filing first- time claims for unemployment insurance payments fell more than forecast.
Fitch cut Ireland’s credit rating to BBB+ from A+, three steps above non-investment grade, citing the mounting cost to rescue the nation’s banking system. “The downgrade reflects the additional fiscal costs of restructuring and supporting the banking system,” Fitch said in the statement. “Ireland’s sovereign credit profile is no longer consistent with a high investment grade rating.”
Applications for U.S. jobless benefits decreased to 421,000, from a revised 438,000 the prior week, Labor Department figures showed. Economists forecast claims would fall to 425,000.
“There’s a lot of nervousness around what is going on in Ireland,” said Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc. “We’ve seen U.S. data being solid, that will be more supportive for the dollar.”