The dollar is attempting to rebound from some recent weakness against its major European competitors on Monday and is adding to some recent gains against the Japanese Yen. The Federal Reserve announced a third round of quantitative easing at the end of last week, which was largely expected by investors. There has been little news at the start of the new trading week, except for the weaker than expected New York manufacturing result.
Conditions for New York manufacturers have deteriorated at an accelerated rate in the month of September, according to a report released by the Federal Reserve Bank of New York on Monday, with the index of activity in the sector falling to its lowest level in over three years.
The New York Fed said its general business conditions index fell to a negative 10.41 in September from a negative 5.85 in August, with a negative reading indicating a contraction in regional manufacturing activity. Economists had been expecting the index to climb to a negative 2.0.
The European finance ministers' meeting in Cyprus on Saturday failed to find a consensus over the European Commission's proposal on the banking union. Countries, including Germany, have aired differences over the timetable for the single supervisory mechanism.
Direct recapitalization of Cypriot banks through the European Stability Mechanism (ESM) should start at the beginning of next year, European Central Bank Governing Council member Panicos Demetriades reportedly said in an interview to German daily Handelsblat.
"It would be very important" for Cyprus that the ESM directly recapitalize the country's banks by January 2013, Demetriades, who also heads Cyprus' central bank, told the daily.
The policymaker said he expects the Eurozone and the International Monetary Fund to conclude a review on the expected aid package by October, adding that the country may need external funding for up to five years.
The dollar reached a new 4-month low of $1.3171 versus the Euro on Monday, but has since bounced back to around $1.3115.
The Eurozone current account surplus declined in July largely due to a fall in trade surplus, the European Central Bank said Monday. The surplus fell to a seasonally adjusted EUR 9.7 billion from EUR 14.3 billion in June.
The euro area trade surplus increased in July despite a fall in exports, official data showed Monday. The latest decline in exports, after two straight months of increase, suggests that it will act as a drag on the activity in the third quarter. The trade surplus rose to EUR 15.6 billion from EUR 13.6 billion in June, Eurostat said. Economists had forecast a surplus of EUR 15 billion.
Eurozone labor costs increased 1.6 percent year-on-year in the second quarter of 2012, data released by Eurostat showed Monday. The increase was in line with expectations and followed a 1.5 percent gain in the first quarter.
The buck also reached a new 4-month low of $1.6272 versus the pound sterling Monday, but has since inched back to around $1.6260.
House prices in the U.K. fell for a second consecutive month in August, recording the biggest-ever fall for the month as home buyers disengaged themselves from property search during key Olympic events.
After reaching an 8-month low of Y77.121 versus the Japanese Yen late last week, the greenback has extended its recent recovery on Monday, reaching a level of Y78.735.
by RTT Staff Writer
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