Although the single currency maintained a firm undertone at Asia morning following Monday's strong rebound from 1.2871 to 1.2992 and price briefly penetrated Friday's high of 1.3008 to a fresh 2-month high of 1.3029 after higher-than-expected German June's PPI, which came out at 0.6% m/m versus the forecasts of 0.2%, euro then retreated sharply from there on profit-taking ahead of the results from stress tests on European banks due out on Friday together with the lower-than-expected Hungary debt auctions. Hungary lowered its 3-month discount Treasury bill offer by 10 million forints and the yield raised by 19 bps from a week ago. Later, the single currency hit an intra-day low of 1.2839 after the release of disappointing Goldman Sachs Q2 results, as its earnings per share in Q2 were reported at $0.78, much lower than the economists' forecast of $1.99 per share. However, euro managed to recover to 1.2922 after the release of worse-than-expected U.S. housing starts, which hit the lowest level in eight month at -5.0% in June before retreating.

Versus the Japanese yen, although the greenback rose to 87.19 ahead of MOF's news conference in Asian morning, the pair retreated to 86.74 at European morning on long liquidation as MOF's Finance Minister NOda made no mentioning of recent yen's rise Later, although the greenback retreated after the brief but sharp rise from 86.74 to 87.14 on reaction to the U.S. housing data, buying interest above said 86.74 lifted price again and the pair hit an intra-day high of 87.58 in late NY trade as DJI pared all of the early losses (once dropped around 140 points) and closed the day up by 76 points at 10230.

Although the British pound edged higher at Asian morning and rose to an intra-day high of 1.5310 in tandem with euro at European morning, cable tumbled to an intra-day of 1.5154 at NY opening on dollar's broad-based firmness after the release of wider-than-expected U.K. budget deficit, U.K. June PSNCR climbed to a record high of 20.9 billion pounds and PS net borrowing in June came out at 14.5 billion pounds versus the expectations of 13.1 billion, and the figures showed Britain's budget deficit failed to improve. However, sterling rebounded strongly on active cross-buying in eur/gbp as the cross pair tumbled from 0.8532 to 0.8432 and hit a high of 1.5306 in NY afternoon.

The Bank of Canada raised interest rate from 0.5% to 0.75% as expected for the second time in two months, but indicated that the domestic and global recoveries will be slower than the previous expectation.

On economic front, U.S. building permits in June rose to 2.1%, versus the economists' forecast of -0.7% and -5.9% in May.

Economic data to be released on Wednesday include: Japan BOJ minutes, Australia Westpac leading economic index, U.K. Retail sales, Canada Wholesale sales.