The U.S. dollar fell against the majority of its major rivals overnight as stocks from Europe to Asia rose, weakening demand for the safe-haven greenback. The dollar fell close to a two-month low versus the Euro after Greek Prime Minister Lucas Papademos won approval from parliament for austerity measures needed to receive a second aid package. The Australian dollar also advanced as data showed that Aussie home loan approvals increased in December. There is no major economic data slated for release today in the U.S., but traders will shift their attention to tomorrow’s retail sales print, which is expected to show sales increased by 0.8% in January, up from 0.1% in the month prior. Empire manufacturing, industrial production and the NAHB Housing Market index will be released Wednesday morning and the minutes of the last FOMC meeting will hit the wire at 2 p.m. Weekly jobless claims, housing starts, the producer price index and the Philly Fed are slated for Thursday, while the consumer price index and leading indicators will round out the week on Friday.
The Euro strengthened over the weekend following a trading week that saw Greece come to terms on heightened austerity measures. These austerity measures will likely trigger the release of the second bailout when Euro zone finance ministers meet on Wednesday. However, as the 110 billion euro aid package in May 2010 taught us, a bailout does not automatically spell the end of the Greek debt crisis. In what is a light day across Europe for data, Germany saw its wholesale price index increase in January to 1.2% from 0.0% in December.
The Japanese yen fell against all of its counterparts, save the U.S. dollar, as rising global risk assumption dampened demand for the currency. The yen was also under pressure after a report showed that Japan’s economy shrank at an annualized 2.3% in the fourth quarter amid slumping exports. The contraction compared with a median forecast of a 1.3% decline. The report underscores pressure on the bank of Japan to consider more monetary easing as the gains in the yen worsen prospects for exporting countries such as Sony Corp.
The British pound outperformed the U.S. dollar, and fell against the euro as optimism surrounding the Greek bailout continues to rise. The economic outlook in the U.K. remains dim, as the debt crisis in Europe is weighing down consumer sentiment and the housing market. The RICS England and Wales housing market survey price balance was released today at –16%.
