The euro extended losses across the board in the US trading session. On the day EURUSD has lost 1.2 percent, touching a low of 1.3590. The euphoria that Italy has formed a new technocrat government to deal with its debt crisis was short–lived as Italian bond yields are still at elevated levels as indicated at today’s bond auction. Investor confidence has not been boosted just by ousting political leaders in Greece and Italy. The debt issue still exists with a lot of uncertainties on whether even the new governments can handle it. To make matter worse today European factory output data disappointed by showing a contraction in September, indicating that Europe could be heading into a mild economic recession.
The British pound mainly tracked euro losses. GBPUSD was brought down also by UK data from the Chartered Institute of Personnel and Development which showed U.K. hiring in the fourth quarter from the previous three months. Meanwhile inflation data due tomorrow are forecast to show a drop in CPI, highlighting the sluggish US economic growth. Sterling fell 1.3 percent on the day to touch a US session low of 1.5880.
The Swiss franc snapped a two-day gain versus the dollar, sliding 1.5 percent on the day to 90.91 centimes versus the dollar. The franc weakened after the Swiss Federal Statistics Office said producer and import prices decreased 1.8 percent last month from a year earlier.
The yen made big gains against most major counterparts today on its safe haven status but by the US trading session the Japanese currency took a pause as it was overbought and soon dollar, euro and sterling rebounded to allow for a correction. USDJPY bounced off the day low of 76.80 to rise to 77.12.
The Canadian dollar weakened by 1.1 percent against its US counterpart and steadied by the New York trading session. The Loonie as weighed down by falling crude oil prices, and Canada is a major oil exporter. USDCAD rose to a high of 1.0193 from 1.0078 before going in to a range.
Gold prices fell on Monday due to a broadly stronger dollar, as the two have an inverse relationship since gold is priced in USD. The precious metal fell for the Asian high of $1,796.03 down to $1,773.30 by the New York open, then steadied.