* Moody's cuts Greece's credit rating
* Eurostat shows bigger Greece budget deficit, euro down
* Greek CDS at new high, Greek/German yield spread widens
* Generally upbeat U.S. data boosts dollar vs euro
(Adds comments, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 22 (Reuters) - The euro plunged to its
lowest level since May against the U.S. dollar on Thursday
after Moody's cut Greece's sovereign rating by a notch and
placed the rating on review for a further possible downgrade.
In a statement, Moody's cited the risk that the
debt-strapped country may end up paying a lot more for its
borrowing than initially thought.
For the Moody's downgrade, click on [].
"With the Moody's downgrade, the only surprise is they did
not cut more," said Win Thin, senior currency strategist at
Brown Brothers Harriman in New York. "No way is Greece still a
single grade credit. It is clear the pressures on Greece
continues, manifested in bond...(and) FX markets."
In reaction, two key measures of perceived sovereign risk
soared.
The Greek/German 10-year government bond yield spread
<GR10YT=TWEB><DE10YT=TWEB> rose to 600 basis points, its widest
in 12 years while the cost of insuring Greek debt from default
surged to record highs. [], [].
Following the Moody's news, the euro <EUR=> dropped to
$1.3260, a near one-year low, according to Reuters data. In
midday trading, it was last at $1.3292, down 0.7 percent on the
day. Against the pound, the euro <EURGBP=D4> fell as low as
86.30 pence, its weakest since late January.
The Moody's ratings cut overshadowed news earlier in the
session that Greece may get a short-term bridge loan from
European countries, according to a Greek government source.
See []
"There's a lot of concern that these types of things
(bridge loan) are just band-aids that do little other than buy
time," said Mike Malpede, currency analyst at Easy Forex in
Chicago. "I don't think people see short-term fixes as much of
a help."
The euro had already been under pressure in the European
session after the European Union's statistics office said on
Thursday it has revised Greece's 2009 budget deficit to 13.6
percent of gross domestic product from 12.7 percent.
Greece needs to raise about 10 billion euros by end-May to
refinance debt, make interest payments and fund the deficit.
For a Reuters poll on the risk of Greek default, click
[].
While Greece is still on pace to meet its 2010 deficit
reduction target, the upward revision means the country may
have to accelerate its deficit-cutting efforts over the next
two years, said the European Commission, the EU's executive
body. See [].
In the United States, data showing a fall in jobless
claims, a rise in producer prices in March, and an increase in
existing U.S. home sales further pushed the euro lower against
the dollar. The reports reinforced the view that the U.S.
economy is on a steady path to recovery. For a wrap-up of the
U.S. data, see [].
"The dollar is getting a nice benefit from U.S. data today,
both jobless claims...and...housing data. That's helping to
contrast with the debt worries in the euro zone, resulting a a
broadly stronger dollar," said Joe Manimbo, currency trader,
Travelex Global Business Payments in Washington.
The ICE Futures' dollar index <.DXY>, a gauge of the
greenback's value against six major currencies, rose 0.6
percent to 81.364.
The dollar <JPY=> , however, was down 0.1 percent against
the yen at 93.00 yen, pulling away from the day's high of 93.34
yen. Offers were seen above 93.40 yen, traders said.
The yen has benefited from media reports the Bank of Japan
may upgrade its inflation and growth forecasts in a semi-annual
report next week. []
(Additional reporting by Nick Olivari, Steven C. Johnson,
and Wanfeng Zhou; Editing by Diane Craft)
