The dollar is little changed on Monday, ahead of the start of earnings season. Alcoa will report earnings after the close today, which is traditionally viewed as the beginning of the reporting season. The dollar has held basically flat against the Japanese Yen, but has weakened slightly in comparison to its major European rivals.
A meeting of Eurozone finance ministers today in Brussels is of special significance to Spain and Italy as finance ministers are set to discuss further the measures agreed by the EU leaders on June 29 that includes relaxed bailout rules, steps for more integration, and permitting the Eurozone rescue funds to directly re-capitalize banks.
Surging borrowing costs indicate that markets remain doubtful over the prospects of the currency bloc even after EU leaders struck a crucial deal last week. Further, it also suggested that the European Central Bank’s move to cut interest rate to a record low did little to improve market sentiment. Spain’s 10-year benchmark yield rose to above 7 percent on Monday and Italy’s 10-year bond yield climbed to 6.13 percent.
The French economy is likely to have shrunk 0.1 percent in the second quarter of 2012 after zero growth in the first three months of the year, the latest estimate from the Bank of France showed Monday.
The central bank’s survey of manufacturers and service providers showed that industrial activity will remain more or less stable in the short-term, while forecasts for services indicated uncertainty as to the level of activity in the coming months.
The greenback reached a 2-year high of $1.2259 versus the Euro on Friday, but has eased back to around $1.2300 on Monday.
Investor sentiment in Eurozone fell to the lowest level in three years in July, data released by think tank Sentix showed Monday. The sentiment index fell to -29.6 in July from -28.9 in June. The latest score was the lowest since July 2009. Economists were looking for an improvement to -25.
Business confidence in France weakened for the third consecutive month in June, data released by Bank of France showed Monday. The business confidence index for the industrial sector dropped to 91 in June from 92 in May, which was down from April’s reading of 94. Economists expected the index to remain unchanged in June.
Germany’s external trade rebounded markedly in May with exports growing significantly faster than forecast, mainly supported by demand from countries outside the European Union. The Federal Statistical Office (Destatis) said Monday that exports grew 3.9 percent month-on-month in May, reversing a 1.7 percent decline in April. Economists had expected only a 0.2 percent rise in shipments.
Imports also recovered strongly reflecting improved domestic demand. Arrivals climbed 6.3 percent on a monthly basis compared to expectations for a 0.8 percent rise.
The trade surplus rose to EUR 15.3 billion in May from a revised EUR 14.5 billion surplus in April. Economists were looking for a smaller surplus of EUR 14.1 billion.
The buck reached nearly a one-month high of $1.5460 versus the pound sterling on Friday, but has pulled back to around $1.5515 on Monday.
Permanent and temporary staff appointments at British firms declined in June at sharpest rates since July 2009, according to the Recruitment and Employment Confederation (REC) and KPMG Report on Jobs published Monday. Permanent placements fell for the first time in six months in June, while temporary or contract staff billings dropped for the seventh month running.
The dollar has bounced back slightly from Friday’s low of Y79.415 versus the Japanese Yen, back to around Y79.665 Monday.
Japan saw a current account surplus of Y215.1 billion in May, the Ministry of Finance said on Monday. That was far below forecasts for a surplus of 493.1 billion yen after showing a Y333.8 billion yen surplus in April.