The dollar has declined against its major rivals on Tuesday, the first day of the Federal Open Market Committee's (FOMC) meeting. The FOMC is expected to make an announcement around midday tomorrow whether it will make any change to interest rates. While no change in rates is expected, investors are expecting to hear a decision regarding a third round of quantitative easing (QE3), or an announcement regarding some other form of economic stimulus.
Standard & Poor's on Tuesday said that the short-term risk of Greece leaving the Eurozone may have lessened. However, there remains at least a one-in-three chance of its exit in the medium-to-long term.
Spain raised the maximum target amount at a debt auction but at a higher cost than a month ago as the country's 10-year benchmark yield remained above 7 percent, a euro-era record widely seen as unsustainable, amid concerns that the country may be forced to seek a bailout.
The Bank of Spain extended the time period for the completion of banks' audit report, to September from July 31, Spain's financial daily Expansion reported Tuesday.
The International Monetary Fund on Monday urged Europe to focus on reviving economic growth to help the recovery of the region's crisis-hit economies. A paper published by IMF staff observed that Europe needs to revive economic growth to help break the vicious cycle of the feedback loop, between weak government finances, weak banks and weak growth that continually undermine each other.
Elsewhere, the Group of Twenty nations, during Monday's meeting at Los Cabos in Mexico, called for more efforts by Europe to contain the debt crisis. Meanwhile, the BRICS nations vowed to step up their contribution to the International Monetary Fund to support Europe fight the turmoil.
Eurozone members should "take all necessary policy measures" to safeguard the stability of the single currency bloc, reports said citing the G20 draft communiqué, to be released at the end of the G20 meeting on Tuesday.
The dollar has been steadily pulling back from Monday's 2-session high of $1.2556 versus the Euro on Tuesday and has fallen to around $1.2720.
Construction output in the euro area decreased in April, after returning to growth in the previous month, data released by statistical office Eurostat showed Tuesday. Construction output decreased a seasonally adjusted 2.7 percent on a monthly basis in April, reversing the previous month's 11.4 percent increase, which came after three successive contractions. In EU27, output decreased 6.6 percent month-on-month.
German economic sentiment deteriorated at the sharpest pace since October 1998 in June, as the debt crisis started to wear away investors' expectations over the prospects of Eurozone's largest economy. The ZEW Indicator of Economic Sentiment for Germany decreased by 27.7 points to minus 16.9 points in June. It was the indicator's strongest decline since October 1998. The score was also much worse than economists' forecast of 2.3.
French business sentiment dropped slightly to 92 in June from 93 a month ago, the statistical office Insee said Tuesday. The reading matched economists' expectations.
The greenback has dropped below a 2-day trading range on Tuesday and has set nearly a one-month low of $1.5756 versus the pound sterling.
U.K. annual inflation fell unexpectedly in May to the lowest level since November 2009, raising hopes that more policymakers will support additional stimulus at the upcoming rate-setting session. Driven by lower food and fuel prices, inflation eased to 2.8 percent in May, figures published by the Office for National Office revealed Tuesday. Economists had expected the rate to remain unchanged at April's 3 percent.
The buck is also down slightly in comparison to the Japanese Yen on Tuesday, briefly touching a low of Y78.834.
The Japanese leading index declined less than initially estimated in April, final data from the Cabinet Office showed Tuesday. The leading index that signals the direction of the economy in the months ahead fell to 95.6 in April, the lowest reading since January, from 96.6 in March. But the reading was higher than the preliminary estimate of 95.1.
U.S. housing starts dipped in May, nearly reversing a stronger than initially reported April rebound, according to figures released Tuesday by the Commerce Department. The number of privately owned housing starts at a seasonally adjusted annual rate of 708,000 for May.
While the May figure is 4.8 percent below the revised April estimate of 744,000, revised figures put the April rate notably higher than the 717,000 initially reported. The revised figures put April housing starts at the highest level since October of 2008. Nevertheless, most economists had expected to see at least a small continuation of the growth in May, forecasting an annual rate of housing starts at 720,000.
by RTT Staff Writer
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