The dollar rose to a 2-year high against the euro on Monday as fresh worries about Greece and Spain encouraged a strong bout of safe haven buying.

Investors reacted to a report from Germany’s Der Spiegel that said the International Monetary Fund plans to cancel financial aid payments to Greece.

The euro fell to $1.2133 from $1.2161 in the previous day’s trading and against the yen, the euro fell to ¥94.24, a 12-year low before later trading at around ¥95.11.

Market sentiment was also bruised by the latest Spanish growth data. The Bank of Spain said the nation’s economy weakened further during the second quarter, following a sharp drop in domestic demand.

In its monthly economic report, the central bank said initial forecasts showed Spain’s gross domestic product contracted 0.4% during the second quarter from the previous quarter and fell 1% year-on-year.

Fresh jitters about the economic outlook for Spain and Greece sent the safe haven dollar and yen strongly higher against major currencies.

The dollar index, which measures the US currency against a basket of six others, rose to 83.907 from 83.457 on Friday.

Against the yen, the dollar tumbled to a seven-week low of ¥77.95 before later recovering to around ¥78.44.

Sterling fell to a one week low against the dollar on Monday as concern about the Eurozone hurt the UK currency. The pound was also down against the euro as investors avoided perceived risk currencies.

CJ