The euro touched a five-week high of 1.3072 against the greenback on Monday as investors’ risk appetite returned after European stocks closed higher for a fifth straight session and a report showing that a rise in eurozone inflation last month also helped, however, the pair pared some of its gains later in the day due to the reversal in U.S. stock markets from positive to negative because American Express Co. erased earlier optimism that banks could return to profit in the downturn by saying that the number of people struggling to make credit card payment are growing. In late New York trading, the single currency was up 0.3 percent at 1.2967 versus the U.S. dollar.
Early in the day, the Dow Jones industrial average rose about 2.3 percent to a session high of 7,392 but shed 7 points or 0.10 by the end of the day after American Express Co. said its credit card default rates rose to 8.7 percent. It was Wall Street’s fist decline after a four-day winning streak. The Nasdaq Composite Index fell nearly 2 percent to 1,404 as investors booked profits in semiconductor stocks while The Standard & Poors 500 Index was lowered by 0.35 percent to end at 753.
Other currencies such as sterling rose to as high as 1.4230 versus the dollar in tandem with U.K. shares and traded up by 0.4 percent at 1.4058 in late New York session. The Australian dollar and New Zealand dollar also posted a gain of 0.15 percent and 0.93 percent against greenback, trading at 0.6592 and 0.5300 respectively. However, Japanese yen fell by 0.2 percent versus dollar and last trading at around 98.20.
On the data front, U.S. Treasury said foreigners sold a record net $148.9 billion of U.S. securities in January, stoking concerns about the United States' ability to finance its current account deficit. There were also signs of more weakness in the U.S. economy as the New York Federal Reserve's manufacturing index fell to another record low in March to minus 38.2 while U.S. industrial production tumbled 1.4 percent in February.
The Fed will hold a two-day policy meeting this week and the markets are waiting to see if it signals plans to buy long-dated Treasuries in an attempt to keep interest rates low. The Bank of Japan will also meet this week and may boost long-dated government bond purchases and buying banks' subordinated debt.
On Tuesday, economic data release includes Japan Tertiary industrial index and Machine orders, Australian RBA meeting minutes, Switzerland’s Industrial production data, U.K. DCLG house prices, German and eurozone Zew survey, and U.S. Building permits, Housing starts and PPI data.