The US dollar lost ground today following disappointing jobless claims and Philly Fed data.  Initial jobless claims report showed that 500k Americans filed applications for unemployment benefits last week vs. the previous 484k and 478k eyed.  Further pressuring the dollar was the Philly Fed data posting a -7.7 contraction in demand vs the previous 5.1 and 7.0 eyed, suggesting a slowdown in manufacturing.  Weak employment data coupled with disappointing Philly Fed aided to recent concerns that the US economic recovery may be stalling.

Meanwhile, better than expected German producer prices lifted the euro this morning - currently trading under yesterday's highs of 1.2923.  German PPI printed a gain of 0.5% vs. 0.2% forecast but still lower than the previous 0.6%.  Despite positive data, the euro failed to break the 1.3000 psychological level largely due to renewed concerns about Greece.  An article in German magazine Der Spiegel released that the austerity measures implemented to cut spending may further increase debt service problems in Greece.  Current support level lies at the 100-day moving average of 1.2770.  A break below this level should likely move the euro to the next support of 1.2720.

The British pound continued to trade within recent ranges while remaining well supported by stronger than expected retail sales and public finance data.  Sales, minus auto fuel, in July increased 0.9% vs. the previous 1.0% and 0.2% eyed.  Meanwhile, the government posted a smaller deficit with net borrowing at 3.17 billion compared with 5.52 billion a year earlier and 4.8 billion expected.

The Canadian dollar reversed earlier gains against the US dollar as poor economic data from both regions increased concerns about North America's economic recovery.  In addition to disappointing US jobless claims, Canadian wholesale sales unexpectedly fell in June due to fewer shipments of machinery and equipment.  Sales fell -0.3% vs 0.4% eyed.  Ahead tomorrow, consumer price index for July is scheduled for released with an expected increase of 1.9% vs. the previous 1.0% y/y.

The Japanese yen continued to strengthen against the US dollar on news that the Bank of Japan may increase corporate loan program from 20 trillion yen to 30 trillion.  According to the Sankei newspaper, BoJ may also extend the duration of the loan from three months to six months.  On the other hand, the yen's gains may be pressured later today as there are rumors of BoJ hosting an emergency meeting to discuss the potential of policy easing.  Furthermore, Japan's Vice Finance Minister Naoki Minezaki expressed concerns about the strong yen vs. other country's artificially suppressed currencies.

The Australian and New Zealand dollars continued to be pressured by strong risk aversion and a weaker equity market today.  The kiwi ended its three day gain against the dollar following central bank Governor Alan Bollard's comments suggesting that policymakers may be overlooking inflation pressures caused by sales tax.

For the Aussie this week, the focus will be on the weekend's election.  A victory by opposition leader Tony Abbot will temporarily lift mining stocks and the Aussie due to his stance in resisting the proposed tax on mining companies.

Indications of Overnight rates:
EUR/USD

1.2862

USD/JPY

85.21

GBP/USD

1.5647

USD/CAD

1.0393

USD/MXN

12.7194

USD/CHF

1.0299

AUD/USD

0.8945

NZD/USD

0.7095

 
10-Year Treasury Note Yield:  2.5607%
Dow Jones Industrial Average:  10237.45 - 178.99%

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.