Forex - Dollar, yen, Swiss franc higher as risk appetite crumbles

Forexpros – The U.S. dollar was up against most of its major counterparts on Monday, following a downgrade of the U.S. sovereign debt rating by Standard & Poor’s, while safe haven demand also boosted the yen and the Swiss franc.

During European afternoon trade, the greenback was up against the euro, with EUR/USD shedding 0.45% to hit 1.4214.

The euro was higher earlier after the ECB said in a statement late Sunday that it “will actively implement” its bond-buying program, indicating that it will likely buy Spanish and Italian government bonds.

However, the news failed to ease fears over the risk that the euro zone’s debt crisis could spill over to the region’s third and fourth largest economies.

The greenback was also higher against the pound, with GBP/USD edging down 0.1% to hit 1.6377.

Meanwhile, the greenback was down against the safe haven yen and Swiss franc, with USD/JPY falling 0.82% to hit 77.82 and USD/CHF dropping 0.58% to hit 0.7629.

Japanese Finance Minister Yoshihiko Noda said earlier that he “will continue to carefully monitor market moves”, signaling that the country was ready to continue intervening in currency markets to stem the yen’s strength.

But rating agency Moody's warned that Tokyo's efforts to weaken the yen were ineffective and negative for its sovereign ratings.

Also Monday, official data showed that Switzerland’s unemployment held steady at a seasonally adjusted 3.0% in July, as widely expected.

Elsewhere, the greenback was up sharply against the risk-sensitive Canadian, Australian and New Zealand dollars, with USD/CAD gaining 0.55% to hit 0.9875, AUD/USD retreating 0.83% to hit 1.0356 and NZD/USD tumbling 1.63% to hit 0.8296.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.15% to hit 74.88.

After markets closed Friday, ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA, and kept the rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.

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