Dollar Tumbles As S&P Sounds Alarm On Debt Ceiling

The dollar was hammered on Thursday, as rival European currencies were boosted by an agreement to rescue Greece with minimal exposure to private lenders.
Losses for the buck were particularly pronounced after a ratings warnings from S&P and another round of troubling economic data.
New claims for U.S. unemployment benefits saw a modest increase in the week ended July 16th, according to figures released Thursday by the Labor Department, with claims remaining above the key 400,000 level.
Meanwhile, there is an even chance that the triple-A U.S. credit rating will be downgraded in next three months, according to Standard & Poor's, which warned that failure to raise the nation's debt ceiling would wreak havoc on the global financial system.
The dollar slumped to a 2-week low of $1.44 against the euro, down sharply from last week's 4-month peak of $1.3836.
Reports say the Greek rescue plan calls for extending the maturity of Greek bonds, and expanded funding in case the crisis spreads to Italy or Spain.
Despite early reports to the contrary, banks will not be faced with a tax that would help finance the program. However, the plan may all for default on some debt, according to the New York Times.
Traders shrugged off figures showing Eurozone private sector growth slowed more than expected in July to near stagnation.
The Eurozone Composite Purchasing Managers' Index (PMI) fell to a 23-month low of 50.8 from June's 53.3, Markit Economics said.
The dollar dropped to $1.63 versus the sterling, its lowest since June 6. Earlier this month, the dollar ht a 6-month peak of $1.5778.
The buck slid to Y78.33 versus the yen, edging closer to a record low of 76.30 set back in March.
Leading economic indicators in the U.S. saw a modest increase in the month of June, according to a report released by the Conference Board on Thursday, with the leading indicators index rising in line with economist estimates.
The Conference Board said its leading economic index rose by 0.3 percent in June following a 0.8 percent increase in May. The index rose for the second consecutive month after slipping by 0.3 percent in April.
While a report released by the Federal Reserve Bank of Philadelphia on Thursday said that regional manufacturing activity remained weak in July, the index of activity climbed back into positive territory after turning negative in June.
The Philly Fed said its diffusion index of current activity rose to a positive 3.2 in July from a negative 7.7 in June, with a positive reading indicating an increase in activity. Economists had expected the index to increase to a reading of 5.0.

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