Euro plunges versus dollar

The euro plunged to a session low against the dollar on Wednesday after Moody's cut Greece's credit rating by three notches, citing a growing risk that the government will fail to stabilise its debt position without a restructuring. Optimism that Greece will avoid restructuring its massive debt load initially supported the euro, driving it to a four-week high against the dollar until the Moody's downgrade.
The dollar skidded to an all-time low against the Swiss franc on Wednesday after poor manufacturing and employment data stoked expectations that US interest rates will remain low for longer than markets have expected. "I haven't seen anything that suggested people were wed to their euro position, so we've seen a natural pullback after going above $1.44," said Michael Woolfolk, senior currency strategist at BNY Mellon. "Sentiment was driven last week by worries about Greece but this week is being driven by negative news on the US data front. It comes down to a 'least ugly' contest between the euro and dollar."
The euro hit a four-week high of $1.4459 on electronic platform EBS but then fell as low as $1.4321. Moody's downgraded Greece's ratings to the extremely speculative level of Caa1, seven notches into junk territory, from B1. The outlook on the new rating is negative, in a sign that another downgrade is likely in the short-to-medium term. In late afternoon New York trade, the euro was down 0.5 percent at $1.4386. A UK trader said there was protective selling ahead of $1.4455 barriers, with more sell orders toward $1.4480 ahead of huge barrier option at around $1.4500.
The dollar fell against the franc to record low of 0.8383 and was last down 1.2 percent at 0.84358 francs. The euro also hit a record trough versus the Swiss currency at 1.2079. It last traded at 1.2082, down 1.7 percent. Against the yen, which also benefited from its safe-haven appeal, the dollar was down 0.7 percent at 80.94 yen. "Economic indicators continue to show the economy is re-entering a downward spiral," said Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut.