The US dollar fell broadly as rising equity markets sparked demand for riskier assets at the expense of the safe-haven US currency. The dollar index approached its weakest level in 14 months after data showed US first-time claims for jobless benefits fell to the lowest level since January, fueling gains for stocks. The number of Americans filing first-time claims for unemployment benefits fell last week to the lowest since January, a sign the labor market is deteriorating more slowly as the economy emerges from the recession.
The euro climbed to the highest level in two weeks against the US dollar as European Central Bank President Jean-Claude Trichet said the region's labor market may deteriorate less than forecast as the economy recovers. Trichet also made comments about the US dollar which were not as forceful as some investors had expected. The single currency also advanced versus the yen on Trichet's comments that the 16-nation economy is stabilizing.
Sterling rose against a broadly weaker US dollar, supported after the Bank of England kept interest rates unchanged as widely expected and reiterated it would keep its asset-buying program under review. The pound, however, failed to extend gains on the view that ongoing weakness in the economy might require more stimulus from the BoE.
The Japanese yen strengthened near the highest level in more than eight months against the US dollar earlier on speculation the Bank of Japan will be quicker than the Federal Reserve in withdrawing emergency stimulus measures. The yen paired gains versus the greenback after government data showed the number of Americans filing new claims for jobless insurance fell more than expected to a nine-month low last week.
The Canadian dollar rose against the US dollar on the backdrop of higher commodity prices and growing expectations that domestic jobs data due later this week could be better than expected. Also boosting Canada's commodity-linked currency higher was a rise in gold prices to a record high for the third successive session and a rally in oil prices above $70 a barrel on signs of global economic recovery.
The Australian dollar rallied on strong jobs data, with Australian jobs for September beating expectations for a fall, with 40,600 positions created instead, pushing the Aussie to a 14-month high against the US currency as markets also anticipate more interest rate hikes. The New Zealand dollar climbed to the strongest level since July 2008.
10-Year Treasury Note Yield: 3.171%
Dow Jones Industrial Average: 9,788.00 + 62.42
This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.