Euro Reaches Lowest Level In Almost Three Weeks

The euro reached the lowest level in almost three weeks amid a growing divide over Europe’s new bailout strategy and data that showed the region’s three-year-old sovereign-debt crisis is weighing on its economy. The dollar rose amid higher haven demand. The U.S. securities industry canceled stocks trading today and tomorrow as Hurricane Sandy headed toward the New York City area.

The euro touched a two-week low versus the yen after German Finance Minister Wolfgang Schaeuble rejected another Greek debt restructuring. The euro may decline a two-month low against the dollar should it break below an area of so-called support, Commerzbank AG said, citing trading patterns. The 17-nation currency would be poised to drop more than 3 percent if its weakens below its 200-day moving average, currently at $1.2835, and this month’s low of $1.2804, according to Karen Jones, head of foreign-exchange, fixed-income and commodities technical analysis at Commerzbank in London. The euro weakened 0.3 percent to $1.2904 and touched $1.2885. It reached $1.2883 in 26th of October, the lowest level since 11th of the same month.

GBP/USD
Bank of England official Andrew Haldane told the Occupy group that the Libor scandal has prompted real change by stoking an impetus for banking reform. “I think things then just changed,” he said at an event organized by the group in London today. “That for me was the straw that delivered real change.” Haldane, executive director for financial stability and a member of the central bank’s Financial Policy Committee, spoke after telling Occupy that its protests centered on St. Paul’s Cathedral in London’s financial district had not been in vain.

They helped prompt a “reformation of finance” that is in its early stages, and proposals to change banking may amount to the biggest change since the 1930s, he said. “This crisis will scar a generation,” he said. “It will keep on coming back. That will provide durability to the reforms I just mentioned.” Meanwhile, the British pound dropped after US consumer spending rose a seasonally adjusted 0.8% in September, the Commerce Department said Monday. Spending for August was unchanged at a 0.5% increase.

USD/JPY
Japan's Nikkei share average ended flat on Monday as disappointment about a profit warning from Honda Motor Co. was balanced by hopes that the Bank of Japan will substantially expand its easing program when it meets today. Honda shares fell 4.7 percent in heavy trade after cutting its net profit outlook for the year by 20 percent to 375 billion yen ($4.71 billion) after sales sagged in China due to a boycott of Japanese products after a territorial dispute. Toyota Motor Corp, whose sales in China almost halved in September, reversed early gains to lose 1.6 percent, and Nissan Motor Co dropped 2.2 percent in anticipation of similar forecast cuts when they report results next week.

"Honda's results had quite a big impact on the market today," said Hiroyuki Fukunaga, CEO of Investrust. "It was worse than consensus and they cut the number of cars they are expecting to sell as well." The Nikkei edged down 3.7 points to 8,929.3, extending a loss on Friday that knocked the benchmark from a four-week high. The index has been buoyed over the past month by a softer yen and expectations that the BOJ will expand its asset purchases by at least 10 trillion yen. The Japanese currency thinly traded in the range between ¥79-¥80 per dollar yesterday.

USD/CAD
Canada’s dollar weakened below parity with its U.S. counterpart for the first time since August as investors’ risk appetite declined. The currency fell for a fifth day as U.S. equity trading was canceled with Hurricane Sandy barreling toward the East Coast. Moody’s Investors Service warned 26th of October it may cut the ratings of six Canadian-based lenders. The loonie, as the currency is known for the image of the aquatic bird on the CAD 1 coin, weakened 0.4 percent to CAD 1.0010 per U.S. dollar later yesterday. It hasn’t lost for five consecutive days since May.

The last time it closed weaker than parity was in 6th of August. Meanwhile, the Canadian government will post a surplus of CAD 3.2 billion ($3.2 billion) in the 2015-16 fiscal year following combined deficits of CAD 36.3 over the next three years, Parliamentary Budget Officer Kevin Page said in a report posted on his office’s website today, another news which will make more bearish on loonie.