Fresh softness in some commodity prices on Monday kept the dollar in demand while investors treaded cautiously ahead of a Monday meeting in Brussels at which Greek officials will plead for further financial assistance. The dollar was ahead of the pack earlier alongside its other safe haven comrades of the Japanese yen and Swiss franc. An unexpectedly sharp fall in the Empire state manufacturing index reminded investors of the impact of rising raw materials.
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U.S. Dollar – The dollar was firm overnight with its index reaching 76.00 for the first time since April 4, although there are questions overhanging the fresh dip in commodity prices as New York trading begins. Global stocks are weak but the U.S. index future has rebounded from its earlier low and it appears as though there could be some bargain hunting after the official open. Subsequently the dollar has come off its best levels of the day and is marginally lower at 75.67. The economic calendar is quiet with two small pieces of the jigsaw puzzle to be released Monday. The Empire state manufacturing index for May fell to its weakest since January as activity dipped from 21.7 to 11.88. An NAHB housing index is also due later.
Euro – Investors still seem unconvinced that the euro is due a rebound anytime soon given the imminent Brussels discussions at which ministers will debate more aid for Greece. Ministers reconvene this afternoon and bets are starting on when and what sort of official and unofficial comments will follow. The investing community agrees on one common facet, which is that there is no good outcome at this stage. Banque de France Governor Christian Noyer said at the weekend that predictions that fiscal tightening would cause European growth to tip over the edge have been proved to be ill-judged and outweighed by the rise of private sector confidence lifting the economy back to a healthy growth rate. Core CPI was confirmed at 1.6% in a final reading released earlier today for April. The headline rate accelerated to 2.8%. The single currency stopped its decline at $1.4048 and has recovered by a full cent against the dollar.
British pound – The pound traded sideways for most of the European session and relied on a Rightmove home prices survey for buoyancy as the morning progressed. The timing of Easter and an overall supply-shortage saw asking prices rise to the highest since 2008. This hardly represents a housing recovery with activity remaining light. The pound advanced against the dollar later in the morning to trade at $1.6200 while it is a little weaker per euro at 87.26 pence. Investors will find better trading conditions later in the week surrounding the release of the May MPC minutes and April inflation data.