The US dollar strengthened across the board despite data showing a smaller than expected gain in producer prices last month. In other news, at an Economics Club of New York meeting, Ben Bernanke in a speech commented directly on the greenback, stating that We are attentive to the implications of changes in the value of the dollar. The Fed, he said, will continue to monitor these developments closely. Bernanke's remarks briefly supported the dollar, before resuming its fall after traders focused on the central bank's outlook that it would hold interest rates low for some time.
The euro weakened against the dollar, but managed to pair some its losses still holding below the key psychological level of 1.50 after European Central Bank President, Trichet stated that a strong dollar is important for the international community. In other releases both exports and imports rose materially in September in the Euro Zone helping to push the trade balance back into a surplus.
Sterling fell against the dollar, but pushed to a two-month high against the euro after a jump in UK inflation fueled speculation the Bank of England may be nearing the end of its quantitative easing program. With the potential of quantitative easing stopping analysts may look toward future UK interest rates hikes starting as early as late next year.
The Japanese yen followed its counterpart's trend and weakened against the dollar despite yesterday's strong GDP release and amid discussion that Japan will soon release the details of an additional stimulus plan. Look for the weakening to remain short lived as USD/JPY tries to test below 88.01.
The Canadian dollar slid to its lowest level in a week versus the dollar with weaker equities and commodity prices. Oil prices gave back some of the previous session's rally to hold around $79 a barrel, while gold backed off its recent highs. Look for the loonie to continue to track commodity prices and push higher as renewed risk appetite comes back into the picture.
The Australian and New Zealand dollars both weakened against the dollar as a decrease in demand for higher-yielding assets took focus with a backdrop in weaker commodity prices. Look for the dip to be short lived, however, as the Reserve Bank of Australia remains bullish on its economic outlook despite slowing its future interest rate hike view.
10-Year Treasury Note Yield: 3.351%
Dow Jones Industrial Average: 10,369.55 -37.64