The dollar is currently trading mixed compared to its major competitors on Tuesday. The currency has weakened in comparison to the Euro, but has gained ground against the Japanese Yen.
The U.S. consumer confidence data for September came in stronger than expected and the home price index also showed notable growth. Investors are also waiting to hear what transpires during the meeting between German Chancellor Angela Merkel and ECB President Mario Draghi in Berlin.
Germany cannot decouple from Europe and the global economy, Chancellor Angela Merkel said Tuesday. Germany is not an island, but a strong exporting nation, she said at a conference organized by the German Industry Association in Berlin.
She observed that there is a lack of confidence in financial markets about the ability of the governments to repay its debt. It would have been better if the European Court of Justice had been granted powers to monitor the fiscal pact, Merkel noted.
Rating agency Standard & Poor's cut Eurozone's economic forecasts for this year and next on Tuesday, saying the 17-nation economy is entering a new period of recession.
The firm expects the euro area economy to shrink 0.8 percent this year, which is worse than the 0.7 percent contraction forecast in July. For 2013, S&P sees flat growth in the single currency bloc, compared to 0.3 percent forecast in July.
European Court Of Justice may soon be engaged to clarify the doubts regarding the legality of the European Central Bank's recently announced bond-purchase program, Germany's Bild reported on Tuesday.
According to the newspaper, the ECB and Germany's Bundesbank has employed in-house layers to check if the program breached the EU treaties, both in terms of proportion and time.
The dollar rose to $1.2885 versus the Euro early Tuesday, but has since pulled back to around $1.2945.
Germany's consumer confidence is set to remain unchanged in October, survey results from market research group GfK showed Tuesday, which slightly eased fears of the economy slipping into a recession. The forward-looking consumer sentiment index came in at 5.9 in October, unchanged from September and matched economists' expectations.
French business confidence remained unchanged in September, but was markedly below its long-term average, a report from the statistical office Insee showed Tuesday. The headline synthetic index was at 90 in September, unchanged from August. Economists expected the reading to edge down to 89.
The greenback has been bouncing back and forth, in comparison to the pound sterling Tuesday, between the $1.6260 and $1.6210 levels.
The buck has rebounded from a week and a half low of Y77.649 versus the Japanese Yen Tuesday, to around Y77.900.
Home prices in major U.S. metropolitan areas showed a notable annual rate of growth in the month of July, according to a report released by Standard & Poor's on Tuesday.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index rose by 1.2 percent in July compared to the same month a year ago. Economists had been expecting the index to increase by about 1.1 percent year-over-year.
With consumers considerably more optimistic about the short-term outlook, the Conference Board released a report on Tuesday showing a much bigger than expected improvement in U.S. consumer confidence in the month of September.
The Conference Board said its consumer confidence index jumped to 70.3 in September from a revised 61.3 in August. Economists had expected the index to climb to 64.8 from the 60.6 originally reported for the previous month.
by RTT Staff Writer
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