Euro advances to one-month high as Spain keeps investment grade

The euro strengthened to a one-month high against the dollar after Spain kept its investment-grade credit rating from Moody’s Investors Service, easing concern the region’s debt crisis was spreading.

The 17-nation currency appreciated for a fifth day versus the yen as Spanish and Italian bonds rallied. The dollar weakened versus all of its major peers as U.S. housing starts rose to a four-year high last month, damping demand for safer assets. The pound rallied against the greenback after U.K. jobless claims unexpectedly declined.

“It’s all about expectations, which Spain was able to beat,” Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., said in a telephone interview. “There has been talk about renewed appetite on behalf of Spain to take advantage of the next financial bailout package.”

The euro gained 0.6 percent to $1.3128 at 10:02 a.m. New York time, after reaching $1.3137, the highest level since Sept. 17. The common currency advanced 0.3 percent to 103.32 yen. The dollar declined 0.3 percent to 78.69 yen.

Kiwi, Aussie

The New Zealand dollar climbed to its highest level in one month as speculation Spain is closer to requesting a sovereign bailout eased concern Europe’s debt crisis was widening and spurred appetite for riskier assets.

The so-called kiwi gained 1 percent to 82.25 U.S. cents, after dropping 0.5 percent to 81.41 yesterday.

Australia’s currency appreciated to a two-week high versus the greenback as investors sought higher-yielding assets.

The so-called Aussie rose 0.9 percent to $1.0370, touching the strongest level since Oct. 2.

The pound climbed to a one-week high against the dollar after the Office for National Statistics said jobless-benefit claims fell 4,000 in September to 1.57 million. The unemployment rate measured by International Labor Organization methods declined to 7.9 percent between June and August.

Sterling gained 0.4 percent to $1.6168 after rising to $1.6178, the highest since Oct. 5.

Gains in the pound were tempered after minutes of the Bank of England’s Oct. 3-4 meeting released today showed that some policy makers felt there was “considerable scope” for more asset purchases to boost the economy.

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