The US dollar strengthened on safe haven flows on the back of lower equity and commodity markets. The Philadelphia Fed. survey came in higher than expected at 16.7 much higher than the forecast of 12.3, while U.S. Initial jobless claims came in unchanged at 505.000 slightly higher than expected. In other news, Federal Reserve officials on Thursday downplayed the consequences of the falling U.S. dollar, underscoring that deflation is still a threat, especially with commercial real estate prices continuing to fall.
The euro fell 0.7 percent against the dollar as European equities fell for a third day and were down 0.8 percent. Look for the euro to remain within its trading range of $1.48-$1.51 as it tries to test the key psychological level of $1.50 again overnight tonight.
Sterling continued its fall as UK borrowing data highlighted a weak financial picture for the UK. The Office for National Statistics said the public sector posted a net cash requirement of 5.899 billion pounds last month, nearly twice as much as expected. Analysts are concerned that if the UK doesn't subside its borrowing than the county may face the possibility of a ratings downgrade.
The Japanese yen saw benefit from safe haven flows as the USD/JPY currency pair fell below 89.00 to test 88.85. Look for the currency pair to continue its push lower as it tries to test 88.35 overnight.
The Canadian dollar weakened against its U.S. counterpart breaking above its 50-day moving average as oil remained under $80 a barrel and as gold futures fell toward $1,130 an ounce. The market will look towards a speech later today by Bank of Canada Governor, Carney who will speak on the Evolution of the International Monetary System and may highlight the central bank's forecast for 1.04 on the currency pair.
The Australian dollar fell over 1 percent breaking below .9200. With overall interest rate differentials favoring the Aussie, look for the decline in the currency to be sort lived. Most analysts and investors expect the RBA to raise rates by 25 basis points to 3.75 percent next month, while U.S. rates may not push higher until 2012.
The New Zealand dollar weakened below .7300 following its other higher-risk currency counterparts. Also weighing on the currency was comments from the main opposition party leader in New Zealand who said it would seek to change a policy that sets the central bank's main role as controlling inflation through interest rates.
10-Year Treasury Note Yield: 3.321%
Dow Jones Industrial Average: 10,266.09 -159.54