(RTTNews) - The dollar weakened versus the euro Monday morning, easing from a 17-month peak even as Europe grappled with a the fallout from a series of downgrades from ratings agency S&P.
S&P this morning lowered the long-term issuer credit rating on the European Financial Stability Facility, EFSF, to 'AA+' from 'AAA' and affirmed the short-term issuer credit rating at 'A-1+'
Despite the warning sirens from S&P, Europe got a shot in the arm this morning in the form of data showing that German economic confidence improved at the sharpest pace on record in January.
The report raised hopes that economic activity is likely to stabilize within the next six months instead of deteriorating further.
The dollar slipped toward $1.28 versus the euro, having touched $1.2623 on Friday -- its lowest since September 2010.
Modest early losses took the dollar to $1.5490 versus the sterling, down from a 17-month high near $1.5420.
The buck also drifted lower versus the yen, setting a 3-month low of Y76.54 before finding its footing.
In economic news from around the globe, the Chinese economy expanded at the slowest pace in more than two years in the fourth quarter of 2011 as a result of sluggish external demand and Beijing's past policy tightening to contain inflation and property prices.
Data from the National Bureau of Statistics showed Tuesday that the gross domestic product grew 8.9 percent year-on-year in the fourth quarter, the weakest pace since the second quarter of 2009.
Looking ahead on the U.S. economic calendar, the results of the New York Federal Reserve's empire state manufacturing survey, which elicits response from 200 manufacturing executives in New York state, is slated to be released at 8:30 am ET. The headline general business conditions index for January is expected to come in at 10.50, a modest increase from 9.5 in December.
