The U.S. dollar rallied across the board, gaining for the first time in six days against the Euro, as traders shed riskier assets. The greenback rose the most against the South African rand and the Australian dollar as stocks fell, damping demand for higher-yielding assets. Indeed, the Stoxx Europe 600 index of shares dropped 0.7% and S&P futures slid 0.5%. Meanwhile, the U.S. economic docket showed that consumer pending stalled in December, ending 2011 on a weak note that raises concern the biggest part of the U.S. economy will cool. Purchases rose 0.0%, failing to meet expectations of a 0.1% gain. Personal incomes climbed 0.5% last month, the most since March after a 0.1% gain the prior month. Tomorrow sees the release of S&P Case/Shiller Home price index, Chicago Purchasing Manager and Consumer Confidence, followed by ADP private employment, construction spending and ISM manufacturing on Wednesday. Weekly jobless claims are slated for Thursday, while non-farm payrolls, the unemployment rate, ISM non-manufacturing and factory orders will round out the week on Friday.
The Euro fell nearly a percent against the dollar overnight in anticipation of the first EU summit of 2012. The EU leaders will meet today in an attempt to put the finishing touches on private sector involvement (PSI). Last week it was reported the two sides were close to an agreement on a lower coupon rate and larger haircut to settle Greek debt. Today’s meeting in Brussels will also look to finalize the new deficit control treaty to prevent meltdown reoccurrence. The German consumer price index numbers were unveiled on par with expectations at 2%, the lowest figure in a year. Italy’s business confidence fell in January, down to 92.1 from a previous 92.5. Italy sold 7.5 billion euros of debt due between 2016 and 2022 today, less than its maximum target of 8 billion euros.
The British pound strengthened against the euro and weakened against the dollar as investors look for safer bets in preparation for the EU summit. As a result, 10-year U.K. gilt yields fell the most in seven weeks, to 1.98%. Hometrack Ltd said U.K. home prices stalled last month and remain under “downward pressure.” The economic docket this week will look to Wednesday’s PMI manufacturing number, and the nationwide house prices, both expected to slightly improve.
