Dollar fell to another fresh 2009 low against euro as risk appetite returned due to rise in U.S. stock markets. Although the greenback rebounded broadly earlier in the Asian session on concerns over China-U.S. tariff dispute may slow down the global economic recovery, reports of merger lifted U.S. shares and decreased the demand for dollar as a safe-haven asset.
Euro later rallied to as high as 1.4654 in New York morning against the greenback after retreating sharply to 1.4515 just before European opening. Eurozone industrial production came in worse than expected at -0.3% m/m in July compared to a reading of revised up 0.2% drop from the prior month. In addition, the European Union’s executive stated in its interim report eurozone economy would expand in both the third and forth quarters but it kept the forecast for 2009 the same as that of in May at 4.0% contraction.
The British pound retreated strongly from a multi-week high of 1.6742 formed on Friday to as low as 1.6522 against the dollar in European morning. Although the pound bounced briefly in tandem with Euro in New York opening, cross selling on sterling versus euro weighed on cable as eur/gbp rallied to an intra-day high of 0.8829 after a European Commission reported that the U.K. economy would contract more than early estimated in 2009.
Data to be released on Tuesday include U.K. RICS house prices, CPI, RPI, and DCLG house prices; Japan machine tools orders; Switzerland industrial production; German and eurozone ZEW index; U.S. Philadelphia Fed survey, retail sales, PPI, business inventories and empire states manufacturing index.