The US dollar weakened vs. most major currencies as concerns over Dubai eased heightening the appeal of riskier assets. Global equity and commodity prices rose as Dubai World said that its debt talks are “constructive,” which easing investor’s concerns. In the US, pending home sales rose 3.7% in October, beating forecasts of a 1.0% fall. The purchasing manager’s index expanded for a fourth consecutive month with a 53.6 reading in November.
The euro rose against the dollar as Dubai World said that it began talks with banks to restructure $26 billion of debt. The purchasing manager’s index in the Euro Zone rose to 51.2 from 50.7 in October in a further sign the region is rebounding from the recession. The unemployment rate for the region was 9.8% in October, which is in line with expectations. In Germany, Europe’s largest economy, manufacturing expanded to 52.4 from 52.0 in November. The unemployment rate was 8.1% in November.
Sterling strengthened against the dollar as investors increased their risk appetite. Markit Economics released data showing that manufacturing fell to 51.8 from a revised 53.4 in November. A reading above 50 is expansionary, indicating the recovery remains fragile but intact.
The Japanese yen weakened after the Bank of Japan announced more monetary policy easing measures to fight deflation and their ailing economy. After an emergency meeting, BoJ offered banks more short-term funds, and kept their rates at 0.1% which may help check the currency’s current rally.
The Canadian dollar gained against the US dollar as key commodity prices rallied. Oil rose above $78 a barrel, and gold hits near a record $1,200 an ounce.
The Australian and New Zealand dollars rallied vs. the US dollar after commodity prices rose and Australia’s central bank raised interest rates for a third successive month. Reserve Bank of Australia increased their rates by 25 basis points to 3.75%, in response to strong economic conditions.
The Mexican peso firmed as stocks jumped as fears over Dubai’s debt troubles eased, and data from the US and China boosted confidence in the global economic recovery.
10-Year Treasury Note Yield: 3.229%
Dow Jones Industrial Average: 10,325.34 – 137.85