The US dollar fell against a basket of currencies as world stocks hit an 11-month high and disappointing data releases. Data from the US Treasury showed net overall capital outflows increased to $97.5 billion in July from a revised $56.8 billion the previous month. The Consumer Price Index rose 0.4% in August mainly due to higher gasoline costs, while industrial output increased for a second consecutive month. Data from the Mortgage Bankers Association indicated demand for home loans fell last week as fixed mortgage rates rose in the holiday-shortened week.
The euro strengthened against the dollar, touching a high of 1.47 overnight. Data from the Eurozone showed falling energy prices kept inflation in negative territory in August, firming the case for the European Central Bank to keep interest rates steady. Data from the European Union statistics office-Eurostat- showed consumer prices in the Eurozone increased 0.3% on the month and dipped 0.2% from a year earlier.
The British pound remains vulnerable in the wake of yesterday's dovish comments by the UK central bank. UK labor data showed jobless benefits rose by 24,000 in August which was broadly in line with expectations. International Labor Organization measure of unemployment rose by 210,000 in the three months to July, pushing jobless rates to 7.9%, the highest since November 1996.
The Japanese yen remained range bound vs. the dollar. The yen initially strengthened after Japan's new finance minister said he opposed currency intervention as long as market moves were moderate. This comment stems from Monday's spark when the yen hit a seven-month high of 90.18 against the dollar.
The Canadian dollar touched a six-week high as commodity prices rally. The recent strength in loonie against the greenback has been widely supported by gold and oil prices. On the data front, Canadian manufacturing sales rose 5.5% in July, topping market expectations of a 2.5% gain.
The Australian and New Zealand dollars advanced to 1-year highs vs. the US dollar as increasing risk appetite prompted investors to purchase riskier assets. The Aussie and the Kiwi rallied as Asian stocks and commodities were broadly higher, after US Fed Reserve Chairman Bernanke's comments that the US recession was likely over.
10-Year Treasury Note Yield: 3.497%
Dow Jones Industrial Average: 9,715.45 + 32.19