Forexpros – The greenback traded lower against its major counterparts on Monday, as speculation that European leaders will act to stem the crisis in the euro zone improved market sentiment, but unexpectedly weak U.S. data added to concerns that the U.S. economic recovery is losing momentum.
During U.S. morning trade, the euro was trading higher against the greenback, with EUR/USD rising 0.39% to hit 1.2484.
Sentiment on the U.S. dollar was lifted after European Central Bank Governing Council member Ewald Nowotny said he supported the idea of a European banking union.
Earlier Monday, Portugal’s Finance Minister Vitor Gaspar announced that the country’s EUR78 billion bailout program was on track. Gaspar also said Lisbon is planning a EUR6.65 billion liquidity injection to shore up the country’s fragile banking system.
In addition, official data released earlier showed that producer price inflation in the euro zone was flat in April, which could give the ECB leeway to cut rates ahead of its policy meeting this week.
But investors remained wary of pushing the single currency too high amid concerns over the outlook for global growth in the wake of Friday’s dismal U.S. employment data, while worries that Spain’s high borrowing costs could force Madrid to seek a bailout also weighed.
The greenback edged lower against the pound, with GBP/USD rising 0.05% to hit 1.5371.
Trading volumes remained thin on Monday, as markets in the U.K. were closed for the Queen’s jubilee.
Elsewhere, the greenback pushed higher against the safe haven yen, with USD/JPY adding 0.36% to hit 78.31.
Earlier Monday, the governor of the Bank of Japan said the central bank was closely monitoring the impact of the yen’s recent gains on the country’s largely export driven economy.
The comments came after the BoJ conducted a rate check on Friday, indicating that it is still prepared to intervene in currency markets to curb the currency’s gains.
The greenback was weaker against the Swiss franc, with USD/CHF falling 0.50% to hit 0.9611.
The greenback ticked lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD dipping 0.02% to hit 1.0409,AUD/USD advancing 0.27% to hit 0.9725 and NZD/USD gaining 0.42% to hit 0.7577.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.29%, to trade at 82.67.
In the U.S., official data showed that factory orders unexpectedly fell 0.6% in April, declining for the second consecutive month and defying expectations for a 0.2%.
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