The euro weakened on speculation some European nations will struggle to raise funds amid the region’s debt crisis after rating companies downgraded the creditworthiness of Ireland and considered additional cuts.
The single currency depreciated, falling to two-week lows against the dollar and the yen as Moody’s Investors Service downgraded two Dublin-based lenders to junk status.
The Swiss franc climbed to a euro-era record, appreciating 1.1% to 1.2641. Against the dollar it appreciated 0.3% to 0.9655.
The Swiss National Bank last week held the three-month Libor target rate at 0.25% in an attempt to keep a lid on the currency. The franc’s strength against the euro has threatened the country’s export-led recovery.
“Since Ireland has kicked off the new bout of tension, it is deemed as the most regional safe-haven currency play,” Derek Halpenny, European head of currency research at Bank of Tokyo- Mitsubishi UFJ Ltd.. “The concern in Europe related to budget deficits is something that Switzerland doesn’t have to deal with.”
The dollar was boosted against the euro by the demand for safety and optimism the world’s largest economy is improving.
The Commerce Department will report Dec. 22 that the U.S. economy grew at a 2.8% annual rate during the third quarter, up from its initial estimate of a 2.5% pace, according to the median of a economists.
Exchange-rates for Australia, Canada and New Zealand, all nations whose economies are tied to commodities, have appreciated at least 20% since the start of 2009 as their central banks boosted interest rates to curb inflation from rising prices of their raw-materials exports.
Surveys of strategists and economists show none of the so-called commodity currencies are likely to strengthen next year.
“The commodity currencies are at extremes,” said Ken Dickson, a money manager at Standard Life Investments. “The Aussie dollar is fully valued. The upside is limited and we would not be advocating long positions.”
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