The USD fell against the EUR and other major currencies after a report portrayed pending home sales in the U.S. increasing 1% in December. Analysts anticipated a slight gain after November's fall, when the federal homebuyer tax credit was extended.
The EUR fell to a seven-month low against the USD last week as Greek bond yields increased in response to concerns about Athens' ability to meet its financing needs and to put its budget in order. The European Commission is scheduled to decide whether to formally accept Greece's budget plan. Greece plans to cut the deficit from a level equal to nearly 13% of gross domestic product last year to less than 3% -- the E.U. limit -- by 2012.
European Union policy makers have no “plan B” to help Greece and Greek Finance Minister George Papaconstantinou said he’s not aware of any discussions of a possible rescue. Papaconstantinou told reporters he has no knowledge of any E-U bailout talks and promised deeper budget cuts, if required.
The CAD is little changed against the USD following yesterday’s biggest gain in four weeks as equities and crude oil rose. The CAD rallied yesterday from C$1.0722, the weakest level since Dec. 18, as currencies related to global economic growth became more attractive to investors.
Group of Seven finance ministers will discuss foreign exchange issues as part of a broader economic discussion and may bring up the Chinese currency among other matters including financial reforms. China has kept its currency pegged to the USD since July 2008 to help its exporters, rejecting calls from European and U.S. officials for it to appreciate. The Chinese economy grew at the fastest pace since 2007 last quarter and is set to overtake Japan’s as the second largest this year. The G-7 ministers will discuss the global economy and changes to U.S. financial regulations at the Feb. 5-6 meeting in Iqaluit, Canada.
Australia's central bank kept rates steady at 3.75 percent, baffling expectations of an increase and as investors cut estimates for how high rates might go this year. The Reserve Bank of Australia surprised almost everyone by saying it wanted to judge the impact of its past three moves before lifting the cash rate any further. It had already raised rates by 75 basis points since October, putting it far ahead of most developed nations in removing economic stimulus.
On the economic calendar tomorrow watch for the Challenger Job Cuts report, the ADP Employment Change report, the ISM Services Index and Crude Oil Inventories. Scheduled earnings include Comcast, ITT Industries, Brinks, Pfizer, Western Union, Time Warner, Cisco Systems, Visa and Yum Brands.