The U.S. dollar rose across the board overnight as a slew of “risk off” events weighed on stocks and boosted the relative safety of the greenback. Indeed, Greece continues to struggle to finalize an agreement to secure a deal for a second bailout, causing European equities to fall over 1.0%. The safe-haven currency also found support after Moody’s Investor Services said its reviewing 17 major banks for possible downgrades. The credit ratings of UBS AG, Credit Suisse AG and Morgan Stanley may be cut by as many as three levels. Goldman Sachs Group, Deutsche Bank AG and JP Morgan Chase were among companies that may be cut by two grades. The Australian dollar pared earlier gains and opened today’s trading lower against the U.S. dollar even after the island nation reported it added the most jobs in 14 months in January. Other higher-yielding currencies, such as the New Zealand dollar and South African rand, also fell with the global risk sentiment. This morning’s economic docket showed that housing starts in the U.S. increased more than forecast in January. Starts rose to a 699K annual rate from December’s 698K pace. Also, claims for jobless benefits dropped last week to the lowest level in four years, another sign the U.S. labor market is on the mend. Wholesale prices in the U.S. rose less than forecast in January as food and energy costs dropped, a sign inflation pressures may remain subdued. The producer price index rose only 0.1% following a 0.1% decrease in the month prior. The Philadelphia Fed will be released at 10 a.m. this morning.
The Euro continued its downward slide overnight, losing 1.0% in the past week according to the Bloomberg correlation-weighted indexes. These losses were extended on news that the release of 130B euros to Greece will be delayed as Europe seeks more extensive spending reductions out of the troubled nation. Tension amongst European leaders is rising as German finance minister Wolfgang Schaeuble hinted that Greek officials were stalling the austerity reforms for political leverage. Greece is now seeking to push austerity implementation back past the April elections. The next Greek payment is due in March.
The British pound fell against the dollar and strengthened versus the euro as the risk of Greek default again dominated yesterday’s trading session. U.K. consumer confidence increased yesterday despite the risk brought on earlier this week by Moody’s Investors Service, who reported credit rating cut could be on the horizon if economic conditions remain bleak.
