The greenback slid across the board in the Tuesday session, tumbling to its lowest level of the year against the euro at 1.4321 and a seven month low versus the pound at 1.6590. The dollar remains under pressure amid renewed skepticism over its position as the world's reserve currency, with comments from Russian President Medvedev reiterating his proposal for a new global currency.
Dallas Fed President Richard Fisher expressed optimism, saying the Fed has been successful in pulling the economy back from the brink and is beginning to see the results from its efforts to support the credit markets. Although he said the US economy is getting less worse with time, he believes it is still not out of the woods and expects the recovery to be very slow. He did offer a somewhat upbeat assessment, saying consumer confidence was picking up somewhat and retail sales was no longer plunging. Fisher said the aggressive action adopted by the Fed helped stave off the worse of the US downturn.
The US data released earlier in the session was better than expected. The April pending home sales sharply beat expectations for an increase of 0.5% from the March reading at 3.2%, instead posting highest increase since 2001, advancing by 6.7%.
The calendar for Wednesday consists of the May ADP private sector employment report, April durable goods orders, May manufacturing ISM, April factory orders and new goods orders.
Euro Strengthens Despite Data
The euro jumped to its highest level against the dollar in 2009 at 1.4321 amid broadbased selling in the greenback. Eurozone economic data released overnight revealed a spike in the unemployment rate to its highest level in 10-years at 9.2%, slightly higher than forecasts for 9.1% from 8.9% in the previous month.
The key highlight from the Eurozone this week will be the ECB's monetary policy on Thursday. While the Bank is not expected to change interest rates from 1.0%, the subsequent policy statement from Bank President Trichet will be closely scrutinized for clues on whether the ECB intends to further ease policy over the coming months or if there are plans for additional bond purchases.