The euro was in limbo Tuesday morning in New York, as traders waited on pins and needles for a crucial vote in the Slovakian parliament on approval for an expanded sovereign debt bailout funds.
The vote, which was expected to be announced earlier this morning, is being delayed by political infighting.
Still, Greece is now likely to get an 8 billion installment of its rescue plan after getting approval from a troika of lenders that were in Athens inspecting the nation's efforts to get its fiscal house in order.
The euro was steady near $1.36 versus the dollar, unable to build on its gains from the previous session. A week ago, the the euro was at a 9-month low of $1.3144.
Weak U.K. manufacturing data helped the euro sustain its weekly gains versus the sterling. The euro was stable at GBP 0.87 after U.K. manufacturing output posted its weakest annual growth rate for 18 months in August.
The euro was also in a stalemate versus the yen, hovering near Y104.30 after gains in the previous few sessions.
The Eurozone debt crisis has reached a systemic dimension and must be tackled decisively, European Central Bank President Jean-Claude Trichet said Tuesday.
In a hearing on the European Systemic Risk Board, or ESRB, before the Committee on Economic and Monetary Affairs of the European Parliament, Trichet urged national governments to act together swiftly as further delays may aggravate the situation.
The dollar was generally stronger on Friday, bolstered by its safe haven appeal amid evidence of economic weakness on both sides of the Atlantic. Traders weighed a disturbing jobs report from the U.S, where anemic private sector job growth was offset by a drop in government jobs.
Figures released Friday by the Labor Department showed that there were no new jobs created for the month, while the unemployment rate held steady at 9.1 percent.
Still, concerns that problems in Europe far outweigh the hurdles facing the U.S. economy helped the dollar extend its weekly gains versus the slumping euro.
The dollar rose a 3-week high of $1.4184 versus the euro, having wobbled around these levels for the past few months.
There was little movement versus the sterling, with dollar holding near $1.62. Same with the yen, leaving the buck just above last month's record low of Y75.93.
The buck spiked higher to C$0.9845 versus Canada's petro-linked loonie as the price of oil tumbled on demand concerns.
The day's big winner was the Swiss franc, with soared in early dealing before leveling off on talk of intervention from Swiss authorities.
The dollar dropped to CHF 0.7720 but improved to CHF 0.7870 going into the long weekend.
U.S. markets are closed Monday for Labor Day.
Lifted by rising energy prices, Euro zone producer price inflation accelerated in July as expected. However, core inflation stabilised, after slowing in the preceding few months, easing the concern over the underlying price pressure in the economy.
Producer prices grew at a pace of 6.1 percent in July from a year ago, data from Eurostat showed Friday. The increase was bigger than the 5.9 percent rise logged for June. The annual increase matched economists' expectations.
Euro Slides Closer To Parity With Swiss Franc
The euro continued its downward spiral against the Swiss franc on Tuesday, as frightened investors flocked to safer assets amid mounting concerns about the health of the global economy.
Focus has turned to the Federal Reserve for the reaction of U.S. policy makers to the bloodletting on Wall Street over the past few sessions.
Economists predict that U.S. interest rates will be held at effectively zero, but the markets will be listening intently for clues about a potential third round of quantitative easing.
Meanwhile in Europe, markets remain rattled by an escalating debt crisis that threatens to eventually cost Germany and France its AAA ratings.
While the European powerhouses are fiscally sound, exposure to the debt of Italy and Spain are making them a riskier bet.
S&P downgraded U.S. debt last Friday, sparking a global sell-off of stocks and resource commodities.
The euro was steady near $1.4250 versus the dollar ahead of the Fed's interest rate decision at around 2 pm ET. The pair has wobbled near that level for the past few months.
The euro dropped to a new record low of CHF 1.0530 against the Swiss franc, and appears bound for parity unless Italy and Spain make meaningful structural reforms.
Choppy dealing left the euro little changed near GBP 0.8740 versus the sterling. U.K. house prices increased in July amid record low interest rates.
Germany's exports declined more than expected in June, data from the Federal Statistical Office showed Tuesday.
Exports fell by 1.2 percent month-on-month in June, following May's 4.4 percent rise. The expected rate of decline for June was 1 percent.
Inflation in China continued its relentless rise in July, climbing to its highest level in three years on the back of spiraling food costs, latest release from the National Bureau of Statistics showed Tuesday. The rate of inflation rose to 6.5 percent in July from 6.4 percent in June.
Euro Wavers Despite ECB Rate Hike
The euro steadied after steep early losses versus the dollar on Thursday, as European Central BankPresident Jean-Claude Trichet indicated that today's modest interest rate hike may be the start of a tightening cycle.
In remarks that some will take to mean the ECB intends to further lift rates in the coming months, Trichet said interest rates remain "low" amid rising consumer prices.
Surprising nobody, the ECB increased the benchmark interest rate by 25 basis points to 1.5 percent. The hike was signaled last month by Trichet, who said the ECB was strongly vigilant in its mandate to provide price stability.
While the interest rate between the euro zone and U.S. is likely to widen, economic and fiscal problems on Europe's periphery continue to make the euro a risky bet.
The euro slipped to $1.4220 in the aftermath of the rate decision, but was holding at $1.4270 during Trichet's somewhat hawkish press conference.
In economic news from the U.S., employment in the U.S. private sector increased by much more than expected in the month of June, according to a report released by payroll processor ADP, with the data easing some of the recent concerns about the strength of the labor market.
The report showed that private sector employment increased by 157,000 jobs in June following an increase of 36,000 jobs in May.
The euro steadied near Y116.10 versus the yen after losing ground in the previous session, but fell further to GBP 0.8910 against the sterling.
The Bank of England left its key interest rate unchanged at a historic low again as expected and maintained the size of the quantitative easing at GBP 200 billion.
At the end of two-day rate setting meeting, the Monetary Policy Committee led by Governor Mervyn King decided to retain the interest rate at 0.5 percent.
A slight rebound took the euro to CHF 1.21 versus the Swiss franc, helping the euro stay away from a recent record low near CHF 1.18.
While selling pressure has remained relatively subdued, stocks have moved mostly lower in early trading on Monday. The markets are seeing further downside following the considerable weakness that was seen last week.
The major averages are currently all in the red, although the Nasdaq is posting a relatively modest loss. While the Nasdaq is down 1.02 points or less than a tenth of a percent at 2,731.76, the Dow is down 40.91 points or 0.3 percent at 12,110.35 and the S&P 500 is down 5.46 points or 0.4 percent at 1,294.70.
The modest weakness on Wall Street comes amid a lack of major economic reports, which has left last Friday's weak jobs report as the last thing in traders' minds regarding the economic outlook.
The economic calendar remains relatively light throughout the remainder of the week as well, which could contribute to choppy trading. Nonetheless, traders are likely to keep an eye on reports on weekly jobless claims, the U.S. trade deficit, and wholesale inventories.
Most of the major sectors have moved to the downside in early trading, with notable weakness visible among airline stocks. The NYSE Arca Airline Index has fallen by 1.4 percent, dropping to its lowest intraday level in well over a month.
The weakness among airline stocks comes after the International Air Transport Association reduced its 2011 profit outlook for the industry, citing natural disasters, high oil prices and political unrest in the Middle East and North Africa.
Banking stocks have come under pressure, dragging the KBW Bank Index down by 1.7 percent to a six-month intraday low. Tobacco, health care, and housing stocks are also seeing early weakness.
Meanwhile, shares of Apple (AAPL) are trading higher as the iPod and iPhone maker kicks off its Worldwide Developers Conference in San Francisco. Apple CEO Steve Job, who is on a medical leave of absence, is set to make a rare appearance and deliver the keynote address.
In its quest to climb on to the "cloud computing" bandwagon, Apple is set to unveil its own cloud application, the "iCloud", at the conference.
TSX Poised For Mixed Open Amid Lack Of Cues
Toronto stocks may struggle for direction Monday morning amid mixed cues from the commodities and global equity markets. The main index witnessed volatile moves in the past two session, before ending flat, indicating cautious approach by investors.
While most Asian markets ended lower overnight, European shares were lingering in red amid selling in bank shares.
U.S. stock futures were pointing to a lower open.
On Friday, the S&P/TSX Composite Index settled flat for a second session, easing 1.59 points or 0.01 percent to 13,517.91.
The price of crude oil was lingering below $100 Monday morning as the recent batch of soft economic data from the U.S. raised concerns over demand growth. Crude for July was down $0.89 to $99.33 a barrel.
The price of gold was steady near $1,550 amid a relatively firm U.S. dollar. Gold for August edged up $1.00 to $1,543.40 an ounce.
In corporate news from Bay Street, communications and consumer electronics products company Wi-LAN Inc. (WIN.TO) posted a much improved first quarter net earnings of $19.8 million or $0.17 per share compared to $1.1 million or $0.01 per share a year ago. Adjusted earnings for the quarter climbed to $13.0 million or $0.11 per share from $7.5 million or $0.07 per share in the prior-year quarter.
Oil and gas explorer Compton Petroleum (CMT.TO) reported a steep drop in its first quarter net earnings at $2.5 million or $0.01 per share compared to $25.2 million or $0.10 per share last year.
Crude oil transportation company TransCanada Corp. (TRP.TO) said Sunday that the Keystone pipeline system has resumed transporting crude oil on Saturday. The 1,316-mile Keystone pipeline, which transports crude oil from Alberta to Cushing, Oklahoma, was shut down after it leaked 10 barrels of oil in Kansas on May 29.
Gold miner Claude Resources (CRJ.TO) swung to profit in first quarter, reporting net income of C$1.8 million or C$0.01 per share versus loss of C$1.6 million or C$0.01 per share last year.
Airlines operator Air Canada (AC_A.TO) said system-wide traffic for May went up 5 percent year-over-year with a 4.7 percent increase in capacity. System load factor increased 0.2 percentage points to 82.2 percent.
China focused plantation company Sino-Forest (TRE.TO) said it believes Muddy Waters' report is inaccurate, spurious and defamatory and announced that it has hired an independent law firm to address the issues.
In economic news, Statistics Canada said building permits fell 21.1 percent to C$5.3 billion, following monthly increases of 16.8 percent in March and 9.8 percent in February.
With businesses growing concerns about U.S. economic weakness and numerous global headwinds, Canada's most widely watched purchasing managers index fell sharply in April compared to the previous month. The Ivey Purchasing Managers Index (PMI) stood at 57.8 by the end of April, compared to 73.20 for March.
European Markets In Negative Territory; Travel Stocks Under Pressure
The European markets are marginally to moderately lower in afternoon trading Monday, as disappointing economic data and falling U.S. index futures led to risk aversion. Airline stocks are under pressure owing to an industry outlook report, while broker comments dragged some technology and leisure travel stocks.
The Euro Stoxx 50 index of eurozone bluechip stocks is losing 0.66 percent, while the Stoxx Europe 50index, which includes some major U.K. companies, is falling 0.41 percent.
The German DAX is losing 0.17 percent and the French CAC 40 is falling 0.81 percent. The UK's FTSE 100 is slipping 0.08 percent and Switzerland's SMI is sliding 0.20 percent.
In Frankfurt, Diversified utilities E.ON and RWE are declining 2.2 percent and 1.3 percent, respectively.Commerzbank reduced its price targets for both companies.
Airline Lufthansa is losing 1.2 percent, after the International Air Transport Association slashed its outlook for 2011 airline industry profits. The industry group cited high oil prices, natural disasters in Japan, and the political unrest in the Middle East and North Africa for the revision. International Consolidated Airlines is falling 1.7 percent in London.
Infineon Technologies is losing 1 percent, while SAP is adding 0.2 percent. Goldman Sachs reduced its rating on European technology sector to "Underweight" from "Overweight." In Paris, Cap Gemini is losing 2.5 percent and STMicroelectronics is dropping 2.4 percent.
Bayer is leading the gainers by adding 1.9 percent. The company revealed positive results from a late stage study of its prostate cancer drug Alpharadin.
Fresenius and Fresenius Medical Care are notably higher. Merck is adding 0.85 percent. Goldman Sachs raised its rating on European healthcare sector to "Neutral" from "Underweight."
Commerzbank is up 0.6 percent. Deutsche Bank is losing 1.1 percent.
Volkswagen is adding 0.6 percent, while BMW and Daimler are moderately down.
In Paris, Lenders Credit Agricole and Societe Generale are losing 2 percent and 1.9 percent, respectively. BNP Paribas and Natixis are falling 1.3 percent each.
Peugeot is falling 1.25 percent and Renault is dropping 0.9 percent.
Danone is up 0.25 percent. HSBC raised the dairy giant's price target to 58 euros from 54 euros.
Lloyds Banking Group is losing 2.05 percent and Barclays is dropping 0.8 percent. HSBC Holdingsand Royal Bank of Scotland are moderately lower.
Carnival is declining 1.85 percent and TUI Travel is falling 0.9 percent. Goldman Sachs reduced its rating on European travel & leisure companies to "Underweight" from "Overweight."
Glencore International is rising 2.4 percent. Kazakhmys and Rio Tinto are moderately higher.
Brewer Diageo is flat. The company's unit East African Breweries Ltd. agreed to buy SABMiller Africa BV's 20 percent shareholding in Kenya Breweries Ltd. SABMiller is marginally up.
Outside the main index, Aegis Group is surging 6.6 percent. The media firm confirmed that it is in talks to sell its market research unit Synovate to French research company Ipsos S.A.
In economic news, investor confidence in eurozone declined for the third consecutive month in June. TheSentix investor sentiment index, an indicator of confidence around 900 investors, decreased to 3.5 from 10.9 points in May. Economists were expecting a reading of 9.2 points.
Meanwhile, euro area producer price inflation eased slightly in April, data from Eurostat showed. The total industry producer prices on the domestic market excluding construction rose 6.7 percent year-on-year in April, slower than March's revised 6.8 percent increase.
Across Asia/Pacific, Australia's All Ordinaries lost 0.38 percent and Japan's Nikkei 225 retreated 1.18 percent. The markets in China, Hong Kong, South Korea, Taiwan and New Zealand are shut for the day.
In the U.S., futures point to a negative open on Wall Street. In the previous session, the Dow fell 0.8 percent, the Nasdaq plummeted 1.5 percent and the S&P 500 dropped 1 percent.
In the commodity space, crude for July delivery is sliding $0.90 to $99.32 per barrel and August gold is adding $3.5 to $1545.9 a troy ounce.
Indian Market Snaps 2-day Losing Streak
The Indian market erased early losses to end modestly higher on Monday, as late buying emerged in IT, healthcare, capital goods and banking stocks.
With disappointing U.S. jobs data weighing on sentiment, the benchmark BSE Sensex opened lower and fell to a low of 18,258 at noon before reversing direction to end 44 points or 0.24 percent higher at 18,420.
Drug maker Cipla led the gainers, rising about 2.3 percent, while ICICI Bank, Infosys, TCS, HDFC Bankand HDFC ended up between 0.9 percent and 1.7 percent.
The broader Nifty index rose by 15 points or 0.28 percent to 5,532 and the BSE small-cap index added 0.17 percent, but the mid-cap index closed 0.25 percent lower. The market breadth was slightly negative, with declining shares outpacing gaining ones by 1461 to 1326 shares on the BSE.
Among the prominent decliners, auto stocks such as Bajaj auto and Mahindra & Mahindra fell about 1.5 percent each on speculation over a fuel price hike expected this week. Ashok Leyland fell a little over 2 percent after the commercial vehicle manufacturer posted a drop in its vehicle sales for May. Surprisingly, Maruti Suzuki rose half a percent after a strike disrupted production at its plant in the northern state of Haryana.
Jaiprakash Associates (down 2.5 percent), ONGC (down 1.4 percent), Reliance Infrastructure (down 1.2 percent), Hindustan Unilever (down 1.1 percent) and Reliance Communication (down 0.9 percent) were among the notable decliners. Among metal stocks, Tata Steel shed 0.8 percent and Hindalco fell 1.6 percent, while Sterlite Industries closed unchanged.
Suryachakra Power Corp climbed 6.6 percent after announcing a deal to set up a 250-megawatt wind farm with Finland's WinWinD Oy. McLeod Russel rose 1.8 percent on reports that domestic raw tea prices will go up by Rs.10-15 per kg in the current fiscal year. Rival Jayshree Tea & Industries closed up 0.9 percent.
Man Infraconstruction soared 9.4 percent on winning a Rs.151-crore order for civil and structural works.Sun TV Network climbed 7.2 percent, extending Friday's 4 percent rally, after the broadcasting firm denied any involvement in the 2G scam. HDIL jumped 5 percent after an update on its slum rehabilitation project in Mumbai. Indraprastha Gas rose 0.7 percent after it reportedly hiked CNG prices in Delhi.
Sugar stocks lost ground after Maharashtra state, the nation's biggest sugar producer, revised downwards its 2010/11 sugar output forecast due to early arrival of monsoon rains. Shree Renuka fell 2.4 percent, Bajaj Hindusthan shed 0.3 percent, Balrampur Chini lost 0.7 percent and Dhampurended down 2.1 percent.
Standard Chartered IDR plunged 17.5 percent after capital market regulator SEBI said the bank will not be required to convert its IDRs into shares. Elsewhere, the other Asian markets edged lower on Monday, as disappointing economic data and falling U.S. index futures led to risk aversion. Trading activity in the region was subdued as markets in China, Hong Kong, South Korea, Taiwan and New Zealand were shut for public holidays.
European stocks were subdued in early trading, dragged down by aviation stocks, after a trade group cut the industry's profit forecast for 2011. The Dow futures were down 11 points and crude prices fell around a percent on profit taking on concerns over the economic outlook.
Euro Relents Versus Dollar As Greece Weighs
The euro paused versus the dollar Monday morning, staying near a monthly peak amid concerns the U.S. economic recovery has stalled.
The Greek debt debacle remains unresolved, putting a cap on the euro's recent gains.
While European officials and the International Monetary Fund have downplayed the threat of a Greek default, markets remain unconvinced that it can be avoided.
Greece has promised severe austerity cuts in return for financial aid.
The euro touched a monthly peak of $1.4657 before leveling off near $1.4620.
Solid gains took the euro to a new monthly high of GBP 0.8930. About five weeks ago the euro touched above 0.90 -- hitting its highest since early 2010.
Choppy dealing left the euro at CHF 1.2230 versus the Swiss franc - not far from last weeks's record low CHF1.2050.
In economic news, Euro area producer price inflation eased slightly in April, data from Eurostat showed. The total industry producer prices on the domestic market excluding construction rose 6.7 percent year-on-year in April, slower than March's revised 6.8 percent increase.
Investor confidence in eurozone declined for the third consecutive month in June. The Sentix investor sentiment index, an indicator of confidence around 900 investors, decreased to 3.5 from 10.9 points in May. Economists were expecting a reading of 9.2 points.
Focus will turn back the U.S. later today. At 3:45 pm ET, Federal Reserve Chairman Ben Bernanke is scheduled to speak to the International Monetary Conference in Atlanta. Additionally, Dallas Federal Reserve President Richard Fisher will speak at a Market News International seminar in New York at 5:30 pm ET.
Euro Weakens As Sovereign Debt Demons Resurface
The euro was weaker across the board on Thursday after a report in a German newspaper brought Europe's sovereign debt crisis back to the forefront.
German Finance Minister Wolfgang Schaeuble said that Greece may need to negotiate with creditors, according to Germany's Die Welt newspaper.
And with Portugal's rescue terms not officially hammered out, the markets will be focused intently on whether the sovereign debt dilemma take a dangerous new turn.
The euro has surged higher in recent days versus the dollar, but gave back some ground this morning in New York, dropping to $1.4364 before steadying near $1.4420.
The euro touched a 16-month peak of $1.4519 earlier this week, supported by speculation that theEuropean Central Bank will continue to hike interest rates following April's modest tightening measure.
In economic news from the U.S., the Labor Department released a report on Thursday showing that producer prices increased by less than anticipated for the month. The Labor Department said its producer price index rose by 0.7 percent in March following a 1.6 percent increase in February.
First-time claims for unemployment ticked up last week, according to a report released by the Department of Labor Thursday. The surprisingly sharp advance took the figure back across the 400,000 mark.
The euro touched a 7-week low of CHF 1.2843 versus the Swiss franc, and weekly low of Y119.25versus the yen.