The euro failed in its recovery attempt in early deals Monday, as lack of cues on measures to weather eurozone risks and very little macroeconomic data from the region kept traders on the sidelines.
The common currency was a clear outperformer last week on hopes of ECB action to ease Spanish and Italian bond yields. The euro was also supported by dovish Fed minutes, which rekindled speculation of more monetary stimulus.
Recent data from the U.S. and China were not so encouraging, with the labor market in the former still looking gloomy, while the growth in the latter is clearly signaling a hard landing.
Chinese growth concerns worsened further today following the release of a report that showed the Chinese industrial profits fell for the fourth consecutive month in July.
Industrial profits were down 5.4 percent annually to CNY 366.8 billion in the month following a 1.7 percent fall in June. During January to July, industrial profits dipped 2.7 percent from a year ago.
Greece's quest for "more time to implement tough financial reforms and spending cuts" failed to garner adequate support from its eurozone peers.
French President Francois Hollande said after a meeting with Greek Prime Minister Antonis Samaras in Paris on Saturday that the Greeks must demonstrate the credibility of their fiscal consolidation program and the commitment to implement the necessary reforms.
Reiterating that Greece will always remain in the eurozone, Hollande said the European leadership is awaiting the troika report on Greece to make a decision on further aid to the country.
Likewise, German Chancellor Angela Merkel said in an interview to ARD public television that "every day" counts for Greece to comply with its commitments and there is much more to be done.
Representatives of the troika are due to visit Athens in September to assess if Greece has fulfilled earlier agreed bailout requirements for receiving the next installment of EUR 31.5 billion.
Bundesbank President Jens Weidmann has strongly criticized the proposed new round of bond purchases by the European Central Bank, saying that central bank financing could be "addictive like a drug."
In economic news, Germany's import price inflation slowed for the tenth consecutive month in July to 1.2 percent.
Germany's business sentiment deteriorated for the fourth consecutive month in August, with the business sentiment index dropping to 102.3 in August from 103.3 in the prior month. The reading was forecast to ease 102.8.
The common currency pulled back to below the 1.25 level against the US dollar, after having advanced to near the key 1.26 level last week. With the RSI staying near the 50-mark and moving averages widening, a further bear run is expected and the pair may re-test the 1.2450 level in the near-term.
The European shared currency traded in ranges against the rest of majors. While the EUR/CHF pair hardly moved out of the 1.2013/12 range in early deals, it seesawed within a 40-pip range against the yen between a high of 98.66 and a low of 98.34.
The euro erased some of its Asian session losses against the pound, rebounding to 0.7926 around 6:05 am ET from its previous low of 0.7904. Trading volume in the region was thin as the domestic equity markets are closed today.
The average asking price of a home in the United Kingdom eased 0.1 percent month-over-month in August, property tracking website Hometrack reported, meeting expectations and matching the rate of decline from the previous month. On a yearly basis, prices were down 0.5 percent - unchanged from the July reading.
by RTT Staff Writer
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