The U.S. dollar and Japanese yen gained broadly on Monday as concerns about outbreak of swine flu in Mexico could become a global pandemic and may interpret a delay of global economic recovery. Equities slid worldwide and sent the yen to a one-month high of 96.43 versus the dollar. The yen also strengthened versus most of the other major currencies and it rose to session highs of 125.65, 68.54, 54.60 and 140.18 against the euro, Australian dollar, New Zealand dollar and sterling respectively.
In New York afternoon, the single currency extended losses versus the dollar and sterling to as low as 1.2999 and 0.8881 respectively after comments on monetary policy by European Bank governing council member Ewald Nowotny. He said eurozone rates will stay low for a long time and ECB is ready to used quantitative easing measures if needed.
Meanwhile, ongoing concerns about the U.K. economy and country’s ballooning debt weighted the British pound on Monday and it dropped to as low as 1.4515 against the dollar and 0.8955 versus the euro in early session before stabilizing, last traded at around 1.4630 and 0.8900 respectively.
The fight to safety dented currencies seen as higher risk such as Australian and New Zealand dollars and pushed the Mexican peso down 3 percent versus the U.S. dollar. The Australian dollar and New Zealand dollars declined to session lows of 0.7089 and 0.5623 versus the dollar respectively in New York trading, while the Mexican peso tumbled by nearly 4.7 percent against the greenback on the day to around 14.700.
On the data front, German consumer confidence unexpectedly held steady for a third month as slower inflation boosted household purchasing power and the recession showed first signs of easing. GfK index for May was unchanged from April at 2.5 percent compared to median economists’ forecast of a decline to 2.3. April’s result was revised up from 2.4.
Economic data releases on Tuesday include Japan retail sales, U.K. distribution trades survey, and U.S. consumer confidence. The U.K. Confederation of British Industry’s April survey on retail sales is expected to show the distributive trades balance rising to –40.0 from -44.0 in April.