EUR/USD
The euro softened against the dollar on Monday after European Central Bank President Mario Draghi said monetary authorities were willing to provide low-costs loans to the euro zone's banks to keep interest rates from rising. The euro softened after Draghi said that the European Central Bank may provide banks with a new round of low-cost loans known as long-term refinancing operations to ensure interest rates stay low in short-term money markets and keep inflation rates in target. In 2011, the ECB began lending out €1 trillion in long term refinancing operations to spur recovery, which weaken the euro. Elsewhere, data released earlier showed that the eurozone preliminary manufacturing purchasing managers’ index fell to 51.1 in September from a final reading of 51.4 in August. Analysts were expecting the index to rise to 51.8. Conversely, the eurozone services PMI rose to 52.1, its highest level since June 2011, from 50.7 in August and well above expectations for a reading of 51.1. Germany’s manufacturing PMI fell to 51.3 in September from a final reading of 51.8 in August, defying expectations for an improvement to 52.2. The German services PMI rose to a seven month high of 54.4 from a reading of 52.8 in August. Analysts were expecting the index to tick up to 53.1 Also in Germany, Chancellor Angela Merkel's conservative party won general elections on Sunday, securing her a third term in office.EUR/USD" title="EUR/USD" src="https://d1-invdn-com.akamaized.net/content/pic4173dafe95f6857d37477614bb8b7118.gif" height="434" width="623">
GBP/USD
The pound trimmed gains against the U.S. dollar on Monday, but remained supported as fresh uncertainty over whether the Federal Reserve will soon begin to taper its bond-buying program weighed on demand for the greenback. The dollar found some support after New York Federal Reserve President William Dudley defended the central bank’s decision to keep its stimulus program unchanged last week, in comments on Monday. Dudley said that adjustments to the Fed’s $85 billion-a-month asset purchase program, "need to be anchored in an assessment of how the economy is actually performing”. “The economy still needs the support of a very accommodative monetary policy,” Dudley added. The Fed said last week that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The decision surprised markets, which had been expecting a modest reduction to the scale of the bank’s bond buying program.
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USD/JPY
The dollar dropped against the yen on Monday after a key Federal Reserve official defended the U.S. central bank's decision to keep its dollar-weakening stimulus programs in place. Many market participants were expecting the U.S. central bank to trim the total by USD10 billion or more now that the economy is gaining steam, though on Monday, Federal Reserve Bank of New York President William Dudley defended the decision, stressing that monetary authorities want to be sure recovery is sustained before dismantling stimulus programs. "In my view, the economy still needs the support of a very accommodative monetary policy. Adjustments to that policy need to be anchored in an assessment of how the economy is actually performing, how financial conditions are evolving, and how this affects the longer-term outlook and the risks around it," Dudley said in prepared remarks of his speech. "Our decisions on how to adjust our policy tools—for example, the pace of asset purchases and forward guidance with respect to the level of short-term rates—must be rooted in the ongoing flow of information that informs our judgments about the prospects for a sustainable recovery."USD/JPY" title="USD/JPY" src="https://d1-invdn-com.akamaized.net/content/pic48de235c98b1f362d3ca6e69a37b424a.gif" height="434" width="623">
USD/CAD
The U.S. dollar slipped lower against the Canadian dollar on Monday as uncertainty over the direction of U.S. monetary policy continued after the Federal Reserve’s surprise decision last week to announce no reduction to its stimulus program. The greenback remained under pressure after the Fed said last week that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The decision surprised markets, which had been expecting the U.S. central bank to cut its $85 billion-a-month stimulus program by $10 billion to $15 billion. The greenback found some support after St. Louis Federal Reserve President James Bullard said Friday the decision not to taper in September was “close” and indicated that there could be a small reduction in bond purchases in October. Elsewhere, the loonie, as the Canadian dollar is also known, was higher against the euro, with EUR/CAD sliding 0.36% to 1.3889.
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