The US dollar rose against a basket of currencies, rebounding somewhat from 14-month low against the euro, as disappointing corporate earnings from eBay Inc on Wednesday and today's below-forecast results from Ericsson dented demand for higher yielding currencies and assets. Disappointing corporate earnings, along with an increase in US initial jobless claims to 531,000, cooled some of the recent optimism about a global recovery. The index of US leading economic indicators also rose in September for a sixth straight month, indicating the economy is likely to expand into early 2010. In other news, Chinese data that showed the economy rose 8.9 percent in the third quarter, which fell short of some of the more optimistic predictions, prompted speculation China will withdraw fiscal and monetary stimulus. The news caused investors to take profits on recent gains in the euro and other currencies, which have rallied against the greenback on the view that US interest rates will stay at record lows well into 2010, leaving Asia to lead economic recovery.
The euro fell against the US dollar on a reduction in risk demand on the release of the Chinese data and as US initial jobless claims increased more than forecast. The single currency's losses were tempered before a report tomorrow forecast to show German business confidence increased. The Munich-based Ifo business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 in the previous month.
Sterling fell against the US dollar and euro after UK retail sales data undershot expectations for a 0.5 percent increase, while the annual rise of 2.4 percent was below forecasts of a 2.8 percent increase. Adding to pressure on the pound was a Bank of England policymaker who said the central bank could extend quantitative easing if necessary. The pound's dip stalled a nine-day rally, and data showing UK retail sales were flat in September helped slow the pound's upward momentum.
The Japanese yen slid against the US dollar as concerns mount over weaker Japanese exports given the strength of the yen.
The Canadian dollar fell versus the US dollar as traders lost their appetite for higher-risk currencies ahead of the Bank of Canada Monetary Policy Report while global stocks fell. The dampened mood in equity markets was caused by disappointing corporate results and the Chinese data. Earlier this week, Canada's central bank left its key interest rate steady at a record low 0.25 percent and warned that a strong domestic currency was undermining economic recovery.
The Australian dollar pulled away from fresh 14-month highs as investors cut long positions after Chinese data spoiled expectations of some who were betting on a positive surprise. The New Zealand dollar fell away from 15-month highs as investors took profits amid soft stock markets.
10-Year Treasury Note Yield: 3.406%
Dow Jones Industrial Average: 9,997.35 + 48.06