RTTNews - The dollar rebounded versus other majors on Monday as markets around the world pulled back amid renewed concerns that an economic recovery may be further off than many have presumed.
Concerns that stocks and commodities have gotten way ahead of themselves inspired a round of risk aversion, giving support to the ailing dollar. Its been a rough spring for the safe have dollar, which gave back a big portion of its gains from the darkest days of the financial crisis last year.
However, on Monday, the buck jumped to 4-week highs versus the euro and loonie, while its gains were tempered against the sterling.
The dollar rose to 1.3754 versus the euro, moving further away from a 5-month low of 1.4338. Against the sterling, the buck climbed to 1.6241, staying away from a 6-month low of 1.6662.
Versus the yen, the dollar eased very slightly to 97.80, retaining most of its recent gains. Earlier in the month, the dollar hit a 4-week high of 98.87.
The price of oil briefly plunged below $70 a barrel, giving the dollar an added boost against the petro-linked loonie. The buck rose to C$1.1400, having gained almost five cents in the past five days.
The International Monetary Fund said on Monday that, with the help of stimulus funds, the US recession will be less severe than had been feared.
According to the IMF, the US economy will contract 2.5% for 2009, but will expand 0.75% in 2010. Back in April, the IMF said it expected that the US economy would contract 2.8% this year and show no growth for 2010.
Conditions for New York manufacturers have continued to deteriorate in the month of June, according to a report released by the New York Federal Reserve on Monday, with the index of activity in the sector falling by much more than expected.
The New York Fed said its general business conditions index fell to a negative 9.41 in June from a negative 4.55 in May, with a negative reading indicating a deterioration in conditions. Economists had expected the index to edge down to a negative 5.10.
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