Dollar bounce back against euro

The dollar bounced back from earlier losses against Euro on Monday, after a short-lived sell-off early in the session. A stronger-than-expected surge in inflation in the euro zone muted the effects of a small bounce after the slightly better-than-expected Chicago Purchasing Managers Index.



The EU statistical agency Eurostat said the annual inflation rate in the euro zone hit a new record high of 3.5 percent in March against 3.3 percent in February. The higher-than-expected preliminary figure was far above the European Central Bank's comfort zone of just under 2 percent.

In economic data Monday, business activity in the Chicago region continued to contract in March, but the contraction was less severe than in February, according to a survey of corporate purchasing managers released Monday.

The Chicago Purchasing Managers' index was at 48.2% in March compared with 44.5% in February. Readings under 50% indicate overall business contraction.



Greenback was also helped by U.S. Treasury Secretary Henry Paulson releasing a 218-page proposal to overhaul US financial regulations.


The blueprint for regulatory reform was commissioned in June last year and calls for the U.S. Federal Reserve to expand its powers of oversight beyond the banking system.


Paulson suggested that the current regulatory regime is almost solely focused above ground at 'the tree level' when 'the real threat to market stability is below ground, at the root level where the health of financial firms is intertwined'.