The greenback weakened across the broad on Monday, after news that Abu Dhabi dashed out $10 billion to help Dubai pay its debts. The act curbed safe-haven demand for the greenback and global equities advanced on the news -- contrasted with last week when strong U.S. economic data boosted risk sentiment to the benefit of stocks and the dollar. The dollar index (DXY), a measure of the greenback against a basket of currencies, fell to 76.407 from 76.572 on Friday.
Although the single currency has rebounded to 1.4686 in European morning on news that Abu Dhabi would help Dubai to meet its obligations, renewed selling interest pushed the euro to as low as 1.4617 before recovering in NY. On other news, Eurozone employment for the third quarter of 2009 dropped by 0.5% q/q n 2.10% y/y whilst eurozone industrial production in October decreased by 0.6% n 11.1%, versus the economists' forecast of 0.7% n 10.9% drop respectively.
The Brtish pound had a volatile day on Monday. Although cable initially extended last Friday's selloff to 1.6190 in reaction to the negative weekend U.K. press on the pre-Budget Report and the news that Cadbury had rejected the Kraft offer, sterling rebounded briefly to 1.6327 in Asia on the Abu Dhabi news before running into selling pressure again. Cable fell to as low as 1.6216 in European morning and then recovered in NY on active cross buying in sterling (eur/gbp fell fm 0.9050 to 0.8988).
The greenback remained under pressure and fell to 88.32 in Asia on active cross buying in jpy , however, trading become relatively thin in European and NY session as investors are awaiting the announcement tomorrow about the guidelines for the year's budget. Japan's coalition government has already agreed earlier to keep bond issuance below approximately 44 trillion yen (US$ 495 billion) next fiscal year.
Data to be released on Tuesday include Switzerland industrial production, U.K. RICS house price index, DGLG house price (y/y), CPI, RPI, Canada leading indicators, U.S. foreign treasury buys, net LT TIC flows, capacity utilisation, industrial production, NAHB housing market index.