The greenback rose against most currencies on Monday as investors returned to safe-haven’s U.S. dollar on the back of falling European and U.S. equities markets after a warning from a prominent analyst, Mike Mayo, of Calyon Securities, revived concerns about the health of the U.S. banking sector and also concerns over potential collapse of a takeover of Sun Microsystems. The ICE futures dollar index ended up 0.53 percent to 84.618, while the single currency reversed early gains and fell 0.6 percent to 1.3399 versus the greenback in late New York session.
Earlier in the day, the Japanese yen fell to a nearly six-month lows against the dollar and euro to 101.45 and 137.42 respectively, however, falling stocks’ markets increased risk aversion and yen pared losses against the dollar and turned higher versus the euro. In late U.S. session, dollar traded around 101 level against the yen while euro reversed from 137.42 to as low as 134.44 before stabilising.
The British pound also reversed from multi-month highs of 1.4960 and 151.52 to as low as 1.4670 and 147.73 versus the dollar and yen before staging a recovery respectively, last trading around 1.4730 and 148.90 in later New York afternoon.
Among the commodity currencies, the Canadian dollar fell the most versus the U.S. dollar on Monday on speculation that the Bank of Canada Governor Mark Carney may join Japanese, Swiss, U.K. and U.S. central bankers and dilute the nation’s currency by embracing quantitative easing on report on 23 April. In late New York trading, the usd/cad rebounded strongly from 1.2225 to as high as 1.2242, last seen around 1.2400 level.
Economic reports from European Union’s statistics office in Luxembourg showed the production price index in eurozone fell 1.8 percent on year-to-year basis in February, the most since April 1999 and larger than consensus forecast of 1.5 percent, while decline in annual retail sales last month also exceed economists’ -2.5 percent forecast, dropped by 4 percent and was the biggest slid since the data began in January 1996.
On Tuesday, economic data releases include Japan BOJ rate decision, Australia RBA rated decision, U.K. industrial production and manufacturing production, and eurozone gross domestic production. The consensus forecasts from economists for BOJ target rate and RBA cash target are to remain at 0.10 percent and 3.25 percent in April respectively.