The euro attempted to trim losses against the dollar but was weighed down by investor concerns over the euro zone debt crisis following weak GDP data from Spain, which showed the fourth largest economy in the region has slipped into recession. EURUSD moved off an earlier low of 1.3207 and climbed to 1.3242 in New York trading hours but was still below the European session high of 1.3262. Further dampening market sentiment was signs of weaker economic momentum in the United States. The dollar pared gains after a Chicago PMI report on manufacturing in the Midwest-region fell more than expected. This followed an earlier report showing US consumer spending rose less than expected in March.
Yen gained on safe haven demand. The soft US data pressured USDJPY to a ten-week low of 79.72. The dollar is likely to come under more pressure if the upcoming US jobs numbers from the non-farm payroll report on Friday are disappointing. EURJPY fell to a fresh two-week low of 105.45.
Sterling eased off an eight-month high reached in the European session today. North American trading saw GBPUSD ease down to 1.6220 from 1.6300. The pound has recently been steadily rising against the dollar as the interest rate differentials and differing policy views between the Fed and Bank of England are helping lift sterling against dollar.
The Canadian dollar tumbled against the U S dollar following disappointing GDP data that showed the Canadian economy unexpectedly contracted in February by 0.2 percent, following modest 0.1 percent growth in January. USDCAD jumped to hit a high of 0.9892 in the US session, up 0.9 percent on the day.
The Australian dollar eased further down from a one-month high against the greenback that was reached on Friday. Investors are being cautious ahead of the Reserve Bank of Australia policy meeting on Tuesday when a rate cut of at least 25 basis points is expected. Should the RBA cut rates by 50 basis points then this will weigh on the aussie much more. AUDUSD slid in the North American session to a low of 1.0404, down 0.6 percent from Friday’s one-month high.