Dollar Rebounds on S&P Downgrade, Risk Aversion

NEW YORK, Jul. 28 -- The U.S. dollar rebounded against major currencies in late New York trading on Wednesday as the downgrade of Greece's sovereign credit rating by Standard & Poor' s weighed on the euro.

The rating agency cut Greece's sovereign credit rating by one notch to CC from CCC, saying the European Union's latest bailout plan would put the country into "selective default."

The move hurt investors' confidence in the euro and the shared currency dipped more than 1 percent against the dollar on Wednesday.

Meanwhile, investors continued to keep a close eye on the U.S. debt ceiling issue. House Speaker John Boehner delayed a vote scheduled for Wednesday on a Republican plan to cut spending and raise the debt limits, which added on uncertainties about the debt issue.

The dollar, however, managed to rebound on Wednesday after a two-day losing streak. The dollar index gained 0.82 percent to 74. 08 in late trading.

Economic situation in the U.S. was another concern for the market players. The Federal Reserve's Beige Book on Wednesday indicates that economic activity continued to grow in the period since the last report. However, the pace has moderated in many districts.

Also, the U.S. Commerce Department reported that durable goods orders fell 2.1 percent in June, suggesting that companies still lack interests in expanding business. The disappointing data weighed on the markets and stimulated risk-aversion appetite.

In late Wednesday trading, the dollar bought 78.06 yen, comparing with 77.88 from late Tuesday, and the euro fell to 1. 4372 dollars from 1.4518.

The British pound also fell to 1.6327 dollars from 1.6422. The dollar rose from 0.8011 Swiss francs to 0.8022, and also rose to 0. 9495 Canadian dollars from 0.9431.