The US dollar softened after U.S. consumer prices came out flat in July after gaining 0.7 percent in June, suggesting that the threat of inflation remains far away. Thus, interest rates will remain on hold. Meanwhile, U.S. industrial production rose more than expected in July, supporting hopes the recession is finally drawing to a close. However, U.S. consumer confidence fell in early August as more Americans worried about their finances. Yesterday, sluggish retail sales data reminded the market that U.S. consumers are still very cautious on spending.
The euro rose amid a weaker greenback even though euro zone inflation fell 0.7 percent in July. The data came after yesterday's data showing France and Germany , Europe 's two biggest economies, posted surprise growth in the second quarter.
The British pound is trading steady on chopping trading conditions. The sterling was recently hurt by a jump in UK unemployment rate and as the Bank of England indicated that rates will not be raised for some time.
The Japanese yen rose against a weaker U.S. dollar. Yen gains were also attributed to repatriation of funds by Japanese investors.
The Canadian dollar is trading mixed. Canadian manufacturing shipments rose for the first time in four months, up 1.9 percent in June, boosting the loonie. However, a drop in U.S. consumer confidence planted doubt that fuel demand will rebound this year.
The Australian dollar rose after Reserve Bank of Australia Governor Glenn Stevens indicated that interest rates will have to be raised as the economy recovers. Investors are betting as soon as October after the RBA sounded surprisingly upbeat in recent comments.
The New Zealand dollar extended gains after its nation's retail sales rose for the first time in nearly two years in the second quarter and the housing market showed more signs of stabilizing. The news supports a gradual recovery outlook while interest rates will remain steady in the near term.
10-Year Treasury Note Yield: 3.5167%
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