By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Equity markets continued to set the tone in currency trading Monday, with the dollar falling about 1% versus the euro and British pound as investors showed continued appetite for stocks and other assets.
"While the news stream has been light, the positive start to the earnings season from both the financial and non-financial sector is helping to bolster sentiment," wrote strategists at Brown Brothers Harriman.
That's left the dollar and the Japanese yen to lose ground. Both low-yielding currencies have tended to come under pressure as equities rise. Conversely, both have tended to benefit when economic and financial fears are on the rise.
The euro changed hands at $1.4232, up from $1.4119 in North American trade late Friday, after hitting its highest level since early June. The British pound bought $1.6550, up from $1.6357 Friday but pared some of the gain from in the overnight session.
The dollar index /quotes/comstock/11j!i1:dx\y (DXY 78.92, +0.02, +0.02%) , which tracks the greenback against a trade-weighted basket of six major currencies, was at 78.851, down from 79.475 Friday.
U.S. stocks advanced as troubled lender CIT Group /quotes/comstock/13*!cit/quotes/nls/cit (CIT 1.25, +0.55, +78.57%) was set to receive a lifeline that would allow it to avert bankruptcy. The Standard & Poor's 500 Index /quotes/comstock/21z!i1:in\x (SPX 951.13, +10.75, +1.14%) up 1%. See Market Snapshot.
"News that CIT were in a tentative deal with a bondholder group in securing a $3 billion rescue package lifted investor sentiment," said Sue Trinh, senior currency strategist at RBC Capital Markets, in emailed comments.
CIT Group Inc. has reached a $3 billion rescue-financing agreement with key bondholders that will allow the business lender to avoid bankruptcy and to restructure outside court. See full story on CIT.
The U.S. dollar remained lower after the Conference Board said its index of leading economic indicators rose 0.7% in June. Economists surveyed by MarketWatch expected the index to increase 0.5%, after having jumped 1.3% in May.
The dollar bought 94.29 yen, little changed from 94.33 yen late Friday. Yen trading was light due to a national holiday in Japan.
Deborah Levine is a MarketWatch reporter, based in New York.
