Euro Steadies Near Multi-Month Lows

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The euro held its ground versus other major currencies on Tuesday as stocks continued to improve from recent losses, fueling a bit of risk appetite.

After a rough January that saw the euro drop to its lowest levels since last summer, the euro has been stable this week despite lingering concerns about massive deficits faced by Greece and other EU members.

However, the euro's gains were muted as another round of tame inflation data cemented expectations the European Central Bank could ramp up quantitative easing later this week in an effort to boost the region's sluggish economic recovery.

Meanwhile, the economic picture across the Atlantic in the US got slightly brighter with the release of some mildly encouraging housing data.

The euro drifted higher to 1.3965 versus the dollar, taking back a small fraction of its recent losses. With the advance, the dollar moved away from Sunday's 6-month low near 1.3850.

The euro was steady above Y126 against it Japanese counterpart, staying near a 9-month low of Y125.54, hit in the final hours of January.

While euro remained depressed against its most heavily traded counterparts, it moved sharply high to a monthly peak of 1.5862 versus the aussie. The Reserve Bank of Australia maintaned the overnight cash rate, its key interest rate, at 3.75%.

The decision was not anticipated, with markets widely expecting a fourth successive 25 basis points hike. On the news, the buck jumped to a monthly high of .8779 before drifting slightly lower.

Eurozone producer prices continued to decline in December on an annual basis, suggesting that underlying inflationary pressures remain muted in the region.

The producer prices index, or PPI, fell 2.9% year-on-year in December after a 4.4% drop in November, data released by Eurostat showed Tuesday.

Elsewhere, US pending home sales stabilized in the month of December after showing a substantial decrease in the previous month as the wave of tax-credit driven transactions petered out, industry data revealed Tuesday. Pending home sales showed a modest increase that came roughly in line with estimates.

The National Association of Realtors said pending home sales, a pivotal indicator of activity in the housing sector, increased by 1.0 percent in December following a revised 16.4 percent decrease in November.

(Market News Provided by RTTNews)