Dollar Struggles To Overcome Soft Patch Chatter
The dollar was slightly weaker on Monday, as concerns about the U.S. economy overshadowed delays in resolving the mounting Greek debt crisis.
European officials pushed out a decision on Greece until July, warning Athens to get its fiscal house in order if it wants to avoid defaulting next month.
“I cannot imagine for one second that we would commit to finance Greece without knowing that the Greek Parliament has given a vote of confidence to the Greek government,” said Jean-Claude Juncker, who leads the euro area group of finance ministers.
It is feared that borrowing costs for other profligate Euro area members will rise to unsustainable levels if Greece defaults.
Moody’s Investors Service Friday placed Italy’s Aa2 local and foreign currency government bond ratings on review for possible downgrade, citing economic growth challenges.
Still, the dollar slipped to $1.43 against the euro, down from $1.4220 overnight. Since a brief advance to better than $1.40, the dollar has come under renewed pressure amid evidence the U.S. economy is not turning around.
The dollar was steady near Y80.20 versus the yen, staying in the low end of a stubborn trading range.
There was little movement near CHF 0.8450 versus the Swiss franc, not far from early June’s record low of 0.8327.
The dollar remained slightly more than two cents below par versus its Canadian counterpart.
The Federal Reserve meets later this week, and while they are unlikely to signal a third round of quantitative easing, will probably say that rates will remain at effectively zero for “an extended period.”
German producer price inflation eased in May after spiking up in the previous month, data released by the Federal Statistical Office showed Monday.
The producer price index for German industrial products rose 6.1 percent year-on-year, following a 6.4 percent gain in the previous month. This was the slowest increase in prices in four months.
Japan saw a merchandise trade deficit of 853.7 billion yen in May, the Ministry of Finance said on Monday, staying in the red for the second straight month following the devastating earthquake and tsunami on March 11.
Weighed down by slowdowns in Japan and the United States, the global economy has hit a soft patch and risks are rising amid an unbalanced recovery, the International Monetary Fund (IMF) said Friday.
