The dollar touched a fresh yearly low versus the euro on Tuesday, even after European Central Bank President Jean-Claude Trichet and finance ministers of the sixteen Eurozone countries expressed "worries" about forex movements and voiced support for a strong U.S. dollar.
Its been a brutal stretch for the dollar of late, particularly against the euro. Amid expectations that the interest rate gap between the US and other industrialized nations will widen rapidly once the economic recovery takes hold, the dollar has fallen almost 25 cents from its 2009 highs against the euro, set back in March.
Late Monday night, the dollar dropped to 1.4993, its lowest level in more than fourteen months. The pair was little changed from that mark approaching 8 am ET.
The dollar barely budged versus most other majors ahead of data on US housing starts and producer prices. The Bank of Canada's interest rate decision may also be in focus.
While most economists expect the BoC to maintain its current overnight call rate, Australia, another resource-based economy, surprisingly hiked its key interest rate earlier this month.
Earnings news will also garner attention as participants continue to look for signs that corporations are able to grow revenues.
The dollar was stuck in the mud versus the loonie ahead of the BoC decision, inching slightly higher to C$1.0320. A surprise from central bankers in Ottawa could drive the dollar to parity with the loonie.
Against the sterling the dollar extended its 6-week low, touching 1.6446. With the loss, the buck moved further away from last week's 5-month high near 1.5700.
Choppy trading kept the dollar above the 90 mark versus the yen. Speculation that Japanese officials may intervene to weaken the yen has helped the dollar rebound after testing a 1995 low of 87.08.
Japan's leading index stood at 83.2 in August, down from the initial estimate of 83.3, the Cabinet Office reported Tuesday. However, the leading index improved for the sixth month in a row. In July, the reading was 82.5.
News are provided by InstaForex.