The euro saw weakness against its lower-yielding counterparts on Monday in New York as stock markets struggled in the U.S. and Europe. The European currency reached multi-week highs against both the dollar and euro, but gained on the sterling.
European Central Bank President Jean-Claude Trichet told the business daily Nikkei the ECB is considering additional monetary easing measures to support the economy and Europe will see a gradual recovery in 2010 after experiencing exceptionally challenging situations in the current year.
Repeating his remarks made on the latest Governing Council meeting, Trichet said the next rate cut would be very measured. Further, Trichet said the gradual recovery in 2010, as predicted by international public institutions and also the private sector, depends very much on what authorities do to raise confidence.
The euro continued to drop against the U.S. dollar, reaching a five-week low of 1.2887. The single currency has been trending lower since hitting a 2 1/2-month high of 1.3737 in mid-March.
The single currency fell to a three-week low of 126.44 against the Japanese yen. The European currency has been trending lower for a week.
Bank of Japan Governor Masaaki Shirakawa reiterated that Japan's economic and financial conditions are weakening significantly, speaking at an annual meeting of Japanese trust banks in Tokyo.
On the upside, the European currency hit its highest level in six days against the sterling, touching 0.8914 before leveling off. The euro hit a 2 1/2 month low of 0.8785 last week.
The Confederation of British Industry forecast a slow and fragile recovery in the UK with growth resuming only in the spring of 2010. The industry lobby revised down its GDP forecast for 2009 to a 3.9% contraction compared to an earlier estimate of a 3.3% GDP decline, reflecting a harsher sequential decline of 1.8% in the first quarter of 2009. Further, the CBI predicts 0.2% sequential growth in the second quarter of 2010, which would be aided by aggressive monetary policy, a weaker pound, low inflation and the fiscal support measures announced by many nations.
In other economic news in the Eurozone, the ECB said the current account of the Euro area showed a deficit of EUR 93.6 billion in 2008, around 1% of GDP. In 2007, the current account balance had registered a surplus of EUR 11.1 billion.
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