The U.S. dollar lost ground versus major rivals Monday as traders prepared for long-awaited details of the U.S. Treasury Department's plan to remove hundreds of billions of dollars worth of toxic assets from bank balance sheets.
Treasury Secretary Timothy Geithner is expected to discuss the plan at an 8:45 a.m. Eastern briefing in Washington. See full story.
The news sent bank shares soaring in Asia and elsewhere. European stocks were also gaining ground, and U.S. stock index futures pointed to a strong opening for Wall Street. See Europe Markets. Read Indications.
"Leaks of how the plan may work emerged over the weekend and have helped to lift Asian stocks and reinstate some degree of risk appetite," leaving the dollar weaker, said strategists at Lloyds TSB.
The dollar index , a measure of the greenback against a basket of major currencies, slipped to 83.462, down from 83.701 in late North American trading Friday.
Since last fall, the dollar has tended to rally as equities and other assets have fallen, buoyed by de-leveraging, repatriation and haven-related flows into dollar-denominated assets. The dollar has tended to weaken when those assets were on the rise.
The dollar was hammered last week after the U.S. Federal Reserve announced it was significantly ramping up its efforts to expand the supply of dollars in an effort to jumpstart the economy and avert a deflationary spiral.
"We currently see a massive increase in uncertainty regarding the outlook for the large economic areas as well as for many emerging markets and, therefore, a massively increased uncertainty regarding the outlook for the exchange rates," wrote strategists at Commerzbank in Frankfurt.
"No wonder that our strongest view is: [foreign exchange] volatilities should [reverse] their downtrend and increase significantly," they said.
The euro rose to $1.3658, up from $1.3582.
The dollar rose to 96.37 yen versus the Japanese currency from 95.95 yen on Friday.
The British pound rose to $1.4577 versus the greenback Monday, up from $1.4456 late Friday.
