July 8 (Bloomberg) -- The euro slid versus the dollar amid concern about the stability of the region’s banks as policy makers struggle to contain the sovereign-debt crisis.
Greek, Irish, Italian and Spanish government bonds slumped amid speculation that the 17-member currency region will see its first sovereign default. The euro headed for its biggest weekly drop in a month, even after the European Central Bank raised its benchmark rate 25 basis points to 1.5 percent yesterday.
“We have moved onto a more acute phase of the sovereign- debt crisis judging by the intensity of the rise in peripheral bond yields and the widening of the spreads,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “The market is looking for excuses to sell the euro. The market is desperate to find excuses that these ECB rate hikes are making things worse not better.”
The euro dropped 0.7 percent to $1.4269 as of 10:39 a.m. in London, extending its weekly slide to 1.7 percent. The shared currency declined 0.6 percent to 116.01 yen, while the dollar advanced 0.1 percent to 81.30 yen.
The U.S. currency strengthened against most of its 16 major counterparts tracked by Bloomberg before data forecast to show the world’s largest economy added jobs for a ninth month.
Nonfarm payrolls increased by 105,000 in June after an advance of 54,000 in the prior month, according to the median estimate of 85 economists in a Bloomberg News survey before today’s report from the Labor Department. The unemployment rate probably stayed at 9.1 percent, according to a separate survey. Estimates in Bloomberg’s poll range from 40,000 to 175,000.
Companies added twice as many workers as forecast last month, a report by ADP Employer Services showed yesterday.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, advanced 0.3 percent to 75.21.
--Editors: Matthew Brown, Keith Campbell
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