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Forex - EUR/USD dips as S&P move bolsters demand for greenback
ForexJun 10, 2013 11:36AM ET
Investing.com - The euro softened against the dollar on Monday after the Standard & Poor's credit ratings agency hiked its outlook for U.S. ratings, which strengthened the dollar.
In U.S. trading on Monday, was down 0.06% at 1.3214, up from a session low of 1.3177 and off from a high of 1.3230.
The pair was likely to find support at 1.3177, the earlier low, and resistance at 1.3306, Thursday's high.
Standard & Poor’s earlier revised its long-term outlook on U.S. credit ratings to stable from negative.
The agency affirmed the country's AA+/A-1+ rating.
"The stable outlook indicates our appraisal that some of the downside risks to our ‘AA+’ rating on the U.S. have receded to the point that the likelihood that we will lower the rating within the next two years is less than one in three," Standard and Poor's said.
"We do not see material risks to our favorable view of the flexibility and efficacy of U.S. monetary policy. We believe the U.S. economic performance will match or exceed its peers’ in the coming years. We forecast that the external position of the U.S. on a flow basis will not deteriorate."
The news boosted expectations for the Federal Reserve to begin scaling back stimulus measures soon now that the economy appears to be improving.
Stimulus measures, such as the Fed's USD85 billion monthly bond-buying program, weaken the dollar to spur recovery.
The dollar continued to see support from Friday's jobs data.
The Bureau of Labor Statistics said the U.S. economy added 175,000 jobs in May, beating expectations for an increase of 170,000, after 149,000 jobs were created the previous month.
The headline U.S. unemployment rate ticked up to 7.6% last month, from 7.5% in April as more individuals entered the labor market and began fresh job searches.
Meanwhile in France, industrial output rose 2.2% in April from March, beating market calls for a 0.3% gain, which gave the euro support.
The euro, meanwhile, was down against the pound and up against the yen, with trading down 0.03% at 0.8500, and trading up 1.40% at 130.76.
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