The euro weakened against the dollar yesterday following a fall in US stocks. Additionally the Obama administration proposed that the best chance for success for General Motors Corp. and Chrysler LLC may be bankruptcy, while Treasury Secretary Timothy Geithner stated there could be further government assistance in relation to supporting some banks. The euro reached a one and a half week low against the dollar, hitting $1.3117 amid thin trade, as investors await the G20 summit and the ECB’s interest rate decision on Thursday, where they are expected to announce an interest rate cut as well as quantitative easing.
ECB President Jean-Claude Trichet addressed the European Parliament yesterday, stating that the eurozone economy has weakened since January and that there is "a high degree of uncertainty" with regards to economic outlook. Nevertheless, he said there are no substantial risks for deflation and that the central bank will do what is required to abate the financial crisis. This statement improved the euro slightly, following its increasing weakness on the back of news that Standard & Poor's Ratings Services lowered Ireland's long-term sovereign credit rating to 'AA+' from 'AAA.' S & P also downgraded Hungary’s credit rating on Monday to BBB-.
The Consumer Price Index will be released in the eurozone this morning at 10.00 BST. In the US, Consumer Confidence, Chicago Purchasing Managers’ Index and ABC/Washington Post Consumer Confidence will be announced this afternoon.
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