Dollar index hits 9-day high

The dollar climbed to its highest point in over a week versus a basket of major currencies today, driven by safe-haven flows as investors’ confidence in riskier currencies was hit by Moody’s decision to downgrade the world’s major banks as well as growth concerns.

The euro fell to its lowest point versus the greenback in nine days as caution set in before Friday’s European leaders meeting and a business confidence survey from Germany that is expected to disappoint.

The meeting between German, Spanish, French and Italian leaders will aim to find ways to achieve a banking and fiscal union in the region and, more urgently, it could also be the time for Spain to formally ask for assistance for its struggling banks to receive a 100bn euro loan.

The single currency dropped to $1.2519, falling from Monday’s peak of $1.2748. It was last seen trading at $1.2535 and analysts claimed a break of $1.2520 may clear the way for the near two-year low hit on 1 June of $1.2520 to be tested. The dollar index went up to 82.465, the highest it has been since 13 June and after having rallied by almost one per cent during the previous session.