The US dollar fell against most major currencies on Tuesday on expectations the Federal Reserve will soon unveil new economic stimulus measures and losses accelerated after Moody's Investors Service raised fears about a credit rating downgrade of the United States. Moody's said the US could lose its triple-A debt rating if next year's government budget talks do not result in a lower debt to GDP ratio.
The euro also hit a four-month high on expectations a German constitutional court will approve the euro zone bailout fund, or ESM, fuelling further optimism about a resolution of the region's debt crisis following the European Central Bank's decision last week to buy bonds from highly indebted countries.
The euro last traded at $1.2864, up 0.8 percent on the day, after earlier hitting a peak of $1.2871, its highest since May 14 after it rose above its 200-day moving average around $1.2834. The greenback last traded at 77.74 yen, its lowest in more than three months.
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