The US dollar continued its fall, hitting its lowest level in five months against a basket of currencies as concerns mounted over the AAA ratings status of the United States after Britain 's outlook was downgraded yesterday. Moody's Investors Service stated that it is comfortable with its AAA sovereign rating for the United States , but the rating was not guaranteed forever.
Look for the dollar to remain under pressure as more upbeat views of the recession-hit global economy will encourage risk taking by investors coupled with thin trading conditions due to the Memorial Day holiday weekend.
The euro pushed higher breaking the key psychological level of 1.40 primarily on weaker USD news with no news out of the EuroZone today. Look for the euro to push higher and trade within a new range of 1.37 to 1.44.
Sterling reached its highest level since November of last year despite yesterday's downgrade by Standard & Poor. In other news, data showed the UK economy shrank 1.9 percent for the first three months of the year. Look for sterling to push higher despite the weak news as investors move into riskier assets.
The Japanese yen reached a two month high after Japanese Finance Minister, Kaoru Yosano stated that the country is not thinking about intervention in the currency markets. The currency was also boosted after Bank of Japan Governor, Masaaki Shirakawa said Japan 's economy is no longer in free-fall and he expects the economy to improve in the second quarter. Look for USD/JPY to continue to trade within its recent ranges.
The Canadian dollar reached a seven-month high versus the greenback with the release of higher retail sales coupled with a rise in commodity prices. Retail sales rose 0.3 percent in March, though substantially lower than market expectations for a 0.5 percent rise. Look for the loonie to remain well supported and continue to track commodity prices.
The Australian dollar reached an eight-month high against a weak US dollar as pressure remained on the dollar due to fears over a potential change in the US credit rating coupled with a rise in commodity prices. Look for the Aussie to be pressured ahead of domestic data next week, with first-quarter construction and private capital expenditure releases.
The New Zealand dollar pushed higher, reaching a seven-month high against its US counterpart after breaking the key psychological level of 0.6130. The market will turn its focus to New Zealand 's government budget due out next week, monthly overseas trade and the National Bank of New Zealand 's monthly business confidence survey. Look for the kiwi to hold on to today's gains and push higher on technical movements.
The Mexican peso recovered from earlier losses ahead of a report on inflation due out later today, where analysts expect the annual inflation rate will remain above 6 percent. The central bank is expected, however, to keep cutting interest rates to boost the local economy. Look for the peso to remain under pressure as Mexico 's central bank continues to intervene in the currency markets.
10-Year Treasury Note Yield : 3.397%
Dow Jones Industrial Average : 8,341.84 +49.86