The U.S. dollar traded in a mixed direction overnight as traders await news from the European crisis summit scheduled to start this afternoon in Brussels. Overall, the U.S. dollar index remains at a 6-week low after a senior Fed official opened the door to the possibility of further quantitative easing. Federal Reserve Bank of New York President William C. Dudley said the central bank has the option of starting a third round of asset purchases, which has weighed on the greenback. However, the U.S. dollar rallied versus the Australian dollar after the statistics bureau said the consumer price index only rose 0.6% last quarter from the previous three months. The slowing inflation data has sparked some speculation the Reserve Bank of Australia may cut interest rates as soon as their next meeting. Meanwhile, the economic docket showed that orders for U.S. durable excluding transportation equipment rose in September by the most in six months. Demand for goods meant to last at least three years, outside of airplanes and automobiles, climbed 1.7%, exceeding economists’ forecasts. Total bookings fell 0.8%, slightly beating expectations of a 1.0% decline. Later, New home sales are expected to rise 1.7% in September after falling 2.3% in the month prior.
The Euro held a tight range overnight but remains at 6-week highs against the U.S. dollar before a summit of all 27 European union leaders begins today in Brussels. It will mark the 14th crisis summit in 21 months. The meeting today comes after six days of haggling among finance ministers, central and commercial bankers, chancellors, presidents and prime ministers over the shape of a second bailout for Greece, the recapitalization of banks and the retooling of the 440 billion-euro bailout fund. A meeting of finance ministers originally scheduled for today was cancelled yesterday. There was no major economic activity released today in the Euro zone.
The Japanese yen rose to a post-World War II high versus the U.S. dollar and gained against the Euro as concern U.S. growth is slowing and European leaders will fail to resolve the region’s debt crisis boosted demand for the relative safety of the Japanese currency. Meanwhile, the Nikkei newspaper reported that Bank of Japan officials will discuss more monetary easing at a meeting tomorrow. Measures to mitigate the impact of a strong yen on Japan’s economy may include expanding a 50-trillion yen asset purchase program by 5 trillion yen and purchasing bonds with maturities longer than two years, Nikkei said without citing their source.
The British pound fell modestly against the U.S. dollar as poor economic data painted a dour outlook for the U.K. economy. A gauge for factory orders declined to minus 18 in October, its weakest reading in a year, from minus 9 the previous month, the Confederation of British Industry said in a report in London today. In addition, a quarterly measure of business sentiment fell to minus 30, the lowest since April 2009, from minus 16 in July.
