By Joe Manimbo of Travelex
The U.S. dollar rose to a new 14-month high against the euro Thursday on worries about a growing debt crisis in Europe. The single currency has been battered across the board this week on fears that Greece's debt woes could spread beyond its borders and potentially harm the global recovery.
Fierce rioting in Athens to protest government plans to boost taxes and cut salaries has increased concerns that Greece policymakers might not be successful in their attempt to consolidate Greece's hefty debt load. Consequently, investors have aggressively sold the euro, with the single currency down about 4% this week against the greenback.
At the current rate, euro/dollar is on track for its worst week since October 2008. Highlighting the degree to which it has fallen, the single currency sank to one-year lows against the Japanese yen, nine-month lows against sterling and its lowest in a month against the Swiss franc.
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Investors this morning will focus on the European Central Bank's policy meeting to see if officials hint at any action to restore a sense of calm to regional financial markets.
A general election is underway in the UK, with the pound's near-term fortunes seen closely tied to the outcome.
The Canadian dollar fell to a nine-week low against the dollar overnight as tumbling stocks in Asia hit investor sentiment. However, a tepid recovery in European shares helped the loonie to pare some of its earlier losses.
Market participants Thursday will look to U.S. weekly jobless claims for one last hint on how Friday's nonfarm payrolls might turn out.
The euro kept mostly on the defensive overnight, sliding to its lowest in at least a year against the U.S. and Japanese currencies, an August 2009 trough against sterling and to a one-month low against the Swiss franc. The single currency continued to be battered by mounting worries that Greece's debt dilemma could drag other vulnerable countries in the area like Portugal and Spain down along with it. The prospect of a mushrooming debt crisis has weighed on the outlook for global growth, the key reason behind the selloff in world financial markets this week.