Euro surrenders gains

The euro traded little changed against the dollar on Tuesday, surrendering early gains after the Slovak Parliament rejected the plan to expand the eurozone rescue fund. The Slovak government also lost a confidence vote but the European Financial Stability Facility package is expected to go through in a later re-vote because the outgoing prime minister planned to ask for help from the opposition.
Moves in the euro were limited, however, as the result had been anticipated after a junior party in the coalition said it would abstain. "What it does do though is it throws markets into limbo now for the next couple of days until the Slovakians organise a new government and ultimately get the EFSF up for a second vote, when it's expected to pass," said Brian Dolan. chief strategist at Forex.com in Bedminster, New Jersey. The euro last traded little changed at $1.3637, above an earlier low of $1.3565 set on trading platform EBS. In the near term, traders said the euro would likely consolidate in a range of $1.3550 to $1.37.
Against the yen, the euro was also flat at 104.54. The euro earlier rose against the dollar after US stocks rebounded from early lows. The common currency's recent move has correlated closely with investor appetite for stocks and other risky assets. A lasting euro rally was still unlikely, however, given a lack of the details of European policymakers' plans to re-capitalise banks amid speculation Greece would eventually default on its debt. The greenback held steady at 76.66 yen, not far from a record low near 75.94 yen set in August. Against a basket of currencies, the dollar index rose 0.2 percent to 77.665.
Also on Tuesday, the US Senate is set to vote on a trade bill aimed at pressuring China to allow its yuan currency to appreciate further against the dollar. Ahead of the Senate vote on the China trade bill, spot yuan closed at 6.3750 against the dollar, slightly weaker than 6.3486 at the close on Monday, when it strengthened 0.59 percent in its biggest daily rise since its 2.1 percent revaluation in July 2005. The Chinese currency has appreciated 30.3 percent since then, including the revaluation. Washington and Beijing have exchanged heated remarks over this latest bill but analysts see little chance of passage.