The greenback weakened against the euro yesterday as stock markets around the world rebounded following Monday's selloff, with investors encouraged by Citibank chairman Vikram Pandit who said in an internal memo that the banking group was having its best quarter since 2007. The Dow closed at its session high (up 379 points) while the euro rallied to 1.2823 before retreating sharply to 1.2610 amid thin trading conditions in U.S. afternoon, however, the single currency was able to end the day at 1.2682, compared to its Australian low of 1.2579.
Sterling hit a 6-week low of 1.3690 in New York trading due to active cross selling with the release of weaker-than-expected industrial and manufacturing production data and lingering concerns over the U.K. financial sector weighing on the British pound. The British pound also weakened against the euro and yen to 0.9249 and 135.17 respectively.
Dollar retreated against the yen from 99.14 to 97.90 before rebounding to 98.93 in New York in line with the greenback's late rise versus other major currencies, however, price was unable to break out of its recent range of 96.57-99.69. The greenback weakened initially to 1.1421 versus the Swiss franc before rebounding to 1.1652 on active cross selling in chf.
In other news, Fed Chairman Bernanke said that a sustainable economic recovery would be out of reach until the U.S. financial system is stabilised and measures implemented to prevent a similar breakdown in the future. He suggested several improvements in accounting standards were needed and asid that the G-20 meeting next month should focus on the international aspect of the financial crisis.
Economic data to be released on Wednesday include Australian Westpac consumer confidence, Japan machine orders, German producer prices and factory orders, U.K. trade balance and the Fed budget. The Reserve Bank of New Zealand is expected to cut rates from 3.50% to 2.75% at 20:00GMT on Wednesday.