The US dollar held onto yesterday's gains on anxiety over the U.S. financial rescue plan, whose details remain unclear. Global stocks fell on concerns the recovery plan will fall short, boosting demands for safe haven currencies like the US dollar and Japanese yen. The US dollar was also boosted by news that U.S. retail sales unexpectedly rose 1 percent in January while 8,000 fewer people filed for first time jobless benefits last week. However, a report showing home prices dropping 12.4 percent in 2008 sparked heavy selling on Wall Street. The Dow Jones plunged more than 200 points.

Meanwhile, a deal was agreed on Wednesday on a $789 billion economic stimulus plan--cutting the amount from more than $800 billion--aimed at reviving the ailing economy. However, details remained vague. The market is waiting for the U.S. Congress to pass the plan.

The euro sagged after news that eurozone industrial output fell 12 percent in December, the most on record, paving the way for further rate cuts. The European Central Bank did cut its inflation outlook in 2010 to 1.6 percent from 2 percent while lowering its 2010 growth outlook to 0.6 percent from 1.4 percent. Several ECB officials on Wednesday indicated that interest rates will be slashed at the March 5 meeting after leaving it on hold at 2 percent last week.

The British pound remains sluggish after Bank of England Governor Mervyn King on Wednesday said measures to revive U.K. lending may not work and was ready to take unconventional policy easing steps--like quantitative easing--to revive the economy. Thus, BOE may buy gilts to boost the money supply. Concern that recession in Britain is getting worse will continue to cripple the sterling.

The Australian dollar fell on risk aversion, and news that parliament rejected the government's A$42 billion ($28 billion) economic stimulus plan. However, a surprise rise in employment of net 1,200 jobs in January limited losses. Despite this, the jobless rate jumped to 4.8 percent, the highest since mid 2006. The data suggests more rate cuts are likely in Australia. A 50 basis point cut is expected in March. Meanwhile, the New Zealand dollar is trading steady ahead of Friday's Q4 retail sales data, which will provide more clues on how its economy is doing during a global recession.

The Canadian dollar remains weak on concerns about the vague U.S. bank plan. Safe-haven flows will continue to drive investors out of the loonie and into safer, less risky investments.

Indicative rates:

EUR/USD 1.2701

USD/JPY 90.36

GBP/USD 1.4211

USD/CAD 1.2464

USD/MXN 14.5980

USD/CHF 1.1697

AUD/USD 0.6466

NZD/USD 0.5180

USD/DKK 5.8442

USD/SEK 8.4734

USD/NOK 6.9219

USD/TWD 34.055

USD/CNY 6.8345

10-Year Treasury Note Yield: 2.7662

Dow Jones Industrial Average: 7,763.19 -176.34