U.S. stock-index futures traded mostly lower Monday, with little fresh economic data in the immediate pipeline as investors await potential action by the European Central Bank and possible signals of more stimulus to come from the Federal Reserve later this week.
The euro was recently trading at $1.2270 compared with $1.2322 late Friday in New York. The dollar was at ¥78.18 compared with ¥78.44, while the euro was at ¥95.94, compared with ¥96.03. Meanwhile, the pound was trading at $1.5702 against the dollar, compared with $1.5748 late Friday in New York.
The euro’s slight dip comes after a three-week high against the dollar on Friday of $1.2390. It drifted to as low as $1.2255 before steadying, despite a joint assertion Saturday by Germany’s Chancellor Angela Merkel and Italy’s Prime Minister Mario Monti to do everything to protect the euro zone and a tightening in Spanish government bond yields.
Their comments followed others from European Central Bank President Mario Draghi to do “whatever it takes” to save the euro, prompting expectations in some market quarters that the ECB might resume buying of financially stressed government bonds through its Securities Market Programme.
Adam Myers, senior market strategist at Crédit AgricoleACA.FR +5.41% in London, said foreign exchange markets were in a holding pattern ahead of the European Central Bank’s meeting Thursday.
“The market though always over-expects from the ECB and they rarely deliver so I am wary of Draghi announcing more bond buying, considering it is the German finance ministry which will have to cough up the cash to support a new program and that is something they don’t want,” he said.
Spain slid deeper into recession in the second quarter as a tough new round of austerity to head off the budget crisis that threatens the euro took effect both on overall demand and the price consumers have to pay for goods.
The first official numbers on gross domestic product showed the economy shrank 0.4 percent from the previous quarter after contracting 0.3 percent in the first three months of the year. The economy was 1.0 percent smaller than a year earlier.
Consumer prices according to both Spanish and EU methodology rose 2.2 percent year-on-year, with the EU-harmonized increase above forecasts being due to medicine price hikes put in place by the government to save money and deflate the deficit.
The British government on Monday officially announced a review into the rate-setting process at the center of the recent financial scandal.
The review comes as British and American regulators face mounting scrutiny for their passive approach in policing key benchmarks, including the London interbank offered rate, or Libor. Since Barclays struck a $450 million settlement last month over rate manipulation, lawmakers have blasted authorities for failing to stop the illegal activities at the British bank, despite evidence of problems.
The two-month, government-mandated inquiry will focus on whether British officials should regulate Libor and how governance of the rate can be improved.
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