* Euro falls vs dlr after Fitch cuts Greece rating
* German data also weighs; Dubai woes dent risk appetite
* Dollar falls vs yen on dovish Bernanke
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previous LONDON)
NEW YORK, Dec 8 (Reuters) - The euro slipped against the
dollar on Tuesday, weighed by concerns about Greece's fiscal
health after Fitch downgraded the country's credit rating.
Fitch Ratings cut Greece's debt rating to BBB+ from A- with
a negative outlook, the first time in 10 years a major ratings
agency has put Greece below an A grade, citing fiscal
deterioration in the euro zone's weakest member. For details,
see []
The cut followed a Standard & Poor's report that Greek
banks faced the highest risks in western Europe. []
An unexpected 1.8 percent month-on-month decline in German
industrial output [] also weighed on the euro,
while concerns about Dubai's debt woes pushed investors to seek
the safety of the U.S. currency.
The "euro has been pressured by Fitch's downgrade of Greece
and by S&P's recent decision to put both Greece and Portugal on
negative watch (with a downgrade for Greece having broader
implications for its EU compliance)," said Camilla Sutton,
currency strategist at Scotia Capital in Toronto in a note to
clients.
"We think sovereign rating issues will prove an important
driver of foreign exchange in 2010, with currencies whose
countries face potential downgrades underperforming," she
said.
In early New York trade, the euro <EUR=> was down 0.5
percent at $1.4746, while the dollar index <.DXY>, a non-trade
calculation of the dollar's performance against a basket of six
currencies, gained 0.3 percent to 76.017.
Worries about Dubai deepened as rating agency Moody's
downgraded six Dubai-linked issuers after concluding that no
"meaningful" government support would be provided for top firms
like DP World <DPW.DI> or Emaar Properties <EMAR.DU>.
[]
The dollar stayed weak against the yen <JPY=>, however,
falling 1.4 percent to 88.23 yen, after Federal Reserve
Chairman Ben Bernanke cooled speculation on Monday of an early
rise in U.S. interest rates. The euro was down 1.9 percent
against the yen at a session low of 130.08 <EURJPY=>.
Bernanke said the U.S. economy still faced headwinds and
unemployment could stay high for some time, playing down the
impact of last Friday's stronger-than-expected jobs report.
[] []
The U.S. data, which showed fewer jobs were lost in
November than forecast, raised expectations the Fed may start
to normalize ultra-easy monetary policy earlier than expected
and triggered renewed buying of the dollar, which has now
faded.
"Bernanke's speech was dovish, and he suggested there would
not be an immediate rate rise," said Marcus Hettinger, global
currency strategist at Credit Suisse in Zurich.
Analysts said the yen was the main gainer because Friday's
jobs data had sparked talk the yen would return to being the
funding currency of choice.
"The yen was the biggest loser after the payrolls data and
it is the biggest winner today," Adam Cole, global head of FX
strategy at RBC Capital Markets in London.
The dollar has taken a beating for much of the year on the
view that rates in the United States will stay low while those
elsewhere rise. This would increase the yield advantage of
other currencies against the dollar.
Earlier, European Central Bank President Jean-Claude
Trichet said the euro zone faced a bumpy road to recovery.
[]
(Reporting by Nick Olivari; additional reporting by Jessica
Mortimer in London; editing by Jeffrey Benkoe)
