In a session so far bereft of economic events and data, the dollar finds itself sharply lower as riskier currencies have rallied on the back of, well, nothing. "No news" has proven the catalyst for the rise in pretty much everything against the dollar, which is also licking its wounds from last Friday's Retail Sales report, which showed the first decline in eight months. Data in the U.S. had been firming, albeit not at a pace that many had hoped to see and Friday's figure seems to be giving some pause.
As is often the case when a "risk-on" sentiment pervades markets, Aussie, Canadian and New Zealand dollars are all higher, each reaching levels not seen for a month, and global equities are rallying as well, as traders seem content to up their bets on global recovery. Similarly, the Japanese Yen is a bit softer.
British Pound Sterling was also one of the big winners overnight, not only benefiting from broad dollar weakness, but also from the newly formed (and cleverly named) Office of Budget Responsibility's report that calls for slower growth in the U.K. in 2011 and for a decline in the amount of borrowing the government will have to conduct next year.
Obviously, given the events that continue to unfold just across the English Channel, any decrease in government borrowing is welcomed news; especially in countries that are perceived to have unsustainable deficit levels.
German and French officials are meeting today ahead of the broader EU Summit on Thursday with the hope of aligning the interests and goals of the two largest and most stable member states. Thursday's summit will be closely watched as the countries of the currency bloc are expected to outline new rules (or simply steps they will take to enforce the existing rules) for fiscal responsibility and budget deficit accountability.
This is a big week on the data front as well, with U.S. capital flows data headlining tomorrow and inflation data later in the week. Figures out of the eurozone and Canada will also be of importance.
