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Title: WORLD FOREX: Euro Tumbles On Spain Debt Worries - WSJ.com
Author: Fraser Trevor
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WORLD FOREX: Euro Tumbles On Spain Debt Worries - WSJ.com: "The euro tumbled Wednesday, as news that Moody's Investors Service had ...
The Euro: The Politics of the New Global CurrencyWORLD FOREX: Euro Tumbles On Spain Debt Worries - WSJ.com: "The euro tumbled Wednesday, as news that Moody's Investors Service had placed Spain's credit rating on review for a potential downgrade revived market concerns about Europe's sovereign debt crisis.
Earlier Wednesday, Moody's warned it may downgrade its ratings on Spain's government debt, adding that its banks may require as much as EUR90 billion in recapitalization funds. The country is grappling with a moribund economy and a troubled banking sector, which have unsettled markets and become a microcosm of the euro zone's recession-battered economies.
The euro 'could remain vulnerable in the very near term,' said Citigroup's Valentin Marinov. 'The announcement by Moody's that it put Spanish credit 'Aa1' debt rating under review for possible downgrade is highlighting the lingering risk of renewed escalation of the tensions in the euro area periphery.'
With the dollar broadly underpinned by encouraging data and signs the U.S. economy's pace of recovery is accelerating, the single currency fell more than a percent on the day in midafternoon trading.
A big jump in regional manufacturing activity in New York, a rise in U.S. industrial production and a broadly in-line reading on U.S. consumer price inflation added to the dollar's gains against the euro. The Empire State Manufacturing and consumer price index reports followed strong economic data a day earlier that showed the U.S. economy is picking up steam and inflation is edging higher, but is still relatively benign."

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