Euro retreats from one-month high vs usd before rebounding in New York session
The single currency staged a strong recovery on Monday due to optimism that the ECB will buy bonds to lower borrowing costs in Spain and Italy.
Although the single currency pierced through last week's 1.2406 top to a near 1-month high at 1.2444 in Australian morning on stop-loss buying, lack of follow-through buying quickly sent the pair lower in Asia, price then retreated sharply to session low at 1.2342 in European morning on profit-taking. However, price rebounded strongly after finding renewed buying by semi-official European name near 1.2350 and traders bought euro again due to renewed risk appetite as European and U.S. stock markets extended last Friday's rally and euro rose to 1.2429 in NY morning before stabilising.
Britain's FTSE-100, Germany's DAX and France's CAC-40 rose by 0.37%, 0.77% and 0.81% respectively. Spain's IBEX rallied by 4.41% whilst Italy's FTSE MIB strengthened by 1.54%. Dow Jones index closed the day at 13117, up by 21 points.
Earlier in European morning, DJ reported that Bundesbank spokesman said 'their position has not changed and affirms critical stance on ECB bond buys.' Italian Prime Minister Mario Monti warned tensions within the eurozone over how to resolve the debt crisis are turning countries against each other and threatening to rip Europe apart.
Versus the Japanese yen, the greenback fell initially to 78.35 in Asian morning due to active cross buying of yen vs other currencies. Price later dropped further to an intra-day low at 78.15 at NY midday on dollar's broad-based weakness before staging a recovery.
Although the British pound penetrated Friday's high of 1.5658 to 1.5666 in Australian morning, lack of follow-through buying capped cable's upside and the pair fell sharply in tandem with euro to an intra-day low at 1.5547 in European morning but the pair staged a strong rebound to 1.5644 in NY morning due to renewed risk appetites before retreating.
Data to be released on Tuesday:
Australia RBA rate decision, Swiss Unemployment rate, CPI, U.K. BRC retail sales, Industrial prod'n, Manufacturing prod'n, Germany Factory orders, Canada Building permits, Ivey PMI.