The single currency initially rallied across the board as European Union finance ministers, central bankers and IMF hammered out a 700 billion euro emergency package to stabilize the currency and to prevent Greece's debt crisis from spreading to other eurozone countries. In addition, euro zone central banks also started buying government bonds while the ECB restarted a dollar swap line with the Federal Reserve and these measures boosted risk appetite. While European equities rallied by more than 4% and Dow Jone index ended the day up by 3.9%, the eur/usd pair pared most of its gains later due to uncertainty about how the plan would work.

Euro opened higher in NZ on Monday and jumped to 1.2950 on active short-covering after weekend news of a EU/IMF rescue package for the euro zone countries. Although euro staged a pullback later, renewed buying lifted price to an intra-day high of 1.3095. However, the single currency retreated sharply from there and fell to as low as 1.2759 in NY afternoon. In other news, Moody's stated that a downgrade on Portugal to AA3 would be probable while an adjustment for Greece to below investment grade would be possible.

The British pound also opened higher in tandem with euro in NZ as weekend news of coalition between the Conservative party and the smaller Liberal Democrats to become U.K. new government gave support to sterling. Cable then hit an intra-day high of 1.5054 in NY morning but the pair fell sharply and pared its gains on UK's PM Gordon Brown's comments that he would step aside later and Liberal Democrats would hold talks with the Labour party. In other news, The Bank of England kept interest rates at 0.5% unchanged as expected and made no change to its 200 billion pounds asset purchase target.

Economic data to be released on Tuesday include: U.K. BRC retail sales , Germany CPI final , U.K. Industrial production and U.S. Consumer confidence.