The euro erased most of its Asian session gains in early deals Monday as the eurozone debt woes continued to remain in the centerstage with less macroeconomic drivers to pull triggers.
The European Central Bank's upcoming meeting in September is seen crucial for the direction of euro as speculations are rife that ECB would intervene in the eurozone sovereign bond market.
German Chancellor Angela Merkel's euro supportive comments last week helped keep alive hopes that the ECB would take some decisive steps to reduce surging borrowing costs.
A German magazine on Sunday reported that the European Central Bank is considering setting limits on yields of Eurozone sovereign bonds, if their interest rates exceed a pre-determined threshold above German bonds.
According to the German newspaper Der Spiegel, the central bank would need to prepare buying all of Spain and Italy's present and future debt in order to materialize this plan.
Luxembourg's Prime Minister Jean-Claude Juncker, who also heads the group of euro-area finance ministers, will discuss the request by Greece's Prime Minister Antonis Samaras for a two- year extension to the indebted nation's fiscal adjustment program when he visits Athens on August 22.
Samaras will then meet the leaders of Germany and France later this week. French President Francois Hollande and German Chancellor Angela Merkel meet in the German capital on August 23.
Data revealed Friday that the U.S. consumer confidence increased unexpectedly. Trader focus will now shift to the FOMC minutes due this week and Fed Chairman Bernanke's speech at the Jackson Hole Symposium due for this month end.
The euro was unaffected on data showing that the eurozone construction output declined for the third consecutive month in June, falling a seasonally adjusted 0.5 percent following a 0.2 percent fall recorded in the preceding month.
On a yearly basis, production fell 2.8 percent, much slower than the 8.1 percent decline seen a month ago.
The euro depreciated almost 0.4 percent to 1.2321 against the dollar around 6:00 am ET from the Asian session's peak of 1.2370. The pair is not expected to be trending in the near term as it is in a consolidation mode after failing to break the 1.2450 resistance level.
The common currency also erased its Asian session gains against the yen in early deals, falling as low as 97.90 by 6:10 am ET from its recent highs of 98.38. The pair staged a rebound above the 98.0 level from its fresh multi-year lows of 94.15 hit late July.
Japan's leading index for June was revised up to 93.2 from 92.6. However, the index measuring the direction of the economy in the months ahead fell for the third consecutive month.
The coincident index, which measures the current economic activity, dropped to 94.1 from 95.8 a month ago. But the June reading reflects an upward revision from 93.8.
The euro-franc pair was trading in its recent familiar ranges, moving between 1.2015 and 1.2012.
The common currency failed to re-test the 23.6 percent retracement level against the pound in the daily chart between its July 2011 high and July 2012 lows. The euro-pound pair is presently hovering around the 0.7850 area, well above last month's new multi-year low of 0.7760.
House prices in the United Kingdom fell at the fastest pace ever seen for the month of August as the number of properties coming to the market continued to outstrip demand, property website Rightmove said.
Asking prices for a property in the U.K. declined 2.4 percent month-on-month in August to 236,260 pounds. This was the largest August fall Rightmove has ever recorded and followed a 1.7 percent drop in July.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org