The US dollar fell vs. most major currencies today as the US trade gap widened in March for the first time in eight months. The trade gap grew to -$27.6 billion, the lowest since November 1999. Exports fell 2.4% and imports fell by 1.0% in March contributing to the widening gap.

The euro strengthened against the dollar as the EU indicated that it will stress test its banking system by September to determine its resilience to the economic downturn and if it's adequately capitalized. US stress tests of individual banks made public last week was widely seen as positive in helping give clarity to investors.

Sterling rose against the dollar after UK data showed jobless benefit claims rose by a smaller-than-expected 57,000 in April, beating forecasts of an 80,000 rise. The ILO measure of unemployment rose by 244,000 in the three months to March, taking the jobless rate up to 7.1%. Average earnings fell by -0.4% in the three months to March, the weakest reading on record. Domestic manufacturing output fell by -0.1% in March, beating forecasts of 0.8%. Other positive news includes retail sales which rose by 4.6% on the year in April, and the trade balance which fell to -6.589 billion pounds.

The Japanese yen was stronger against the dollar as improved risk appetite put selling pressure on the dollar. Increased hedging by Japanese exporters also helped boost the yen.

The Canadian dollar strengthened against the dollar after data showed Canada's March trade surplus was more than double what was expected. Canada's trade surplus was C$1.11 billion in March, higher than forecasts of C$262 million, helped by an 18.4% drop in energy imports. Also helping the loonie was crude oil prices which rose above $60 a barrel.

The Australian dollar held firm against the dollar with favorable economic data keeping investors in the high-yielding currency. The government forecast an underlying cash deficit of -A$57.6 billion in the year to end June, 2010 and borrowing of A$60 billion for 2009/10. Both forecasts were within expectations and Standard & Poors said the budget did not threaten the country's triple A rating. Data also showed a sizable 4.9% rise in mortgage loans in April, helped by low rates and grants for first-time buyers. Financing for home construction hit a seven-year peak as it made a 14% jump. The New Zealand dollar climbed higher against the dollar as investors took on more risk.

The Mexican peso weakened against the dollar as Standard & Poor's made a revision to its outlook on Mexico's credit rating from stable to negative. Also weighing on the peso is news that the tourism sector is expected to take until December to recover from news surrounding the flu outbreak.

Indicative rates:

EUR/USD 1.3636

USD/JPY 96.50

GBP/USD 1.5245

USD/CAD 1.1640

USD/MXN 13.1935

USD/CHF 1.1051

AUD/USD 0.7650

NZD/USD 0.6064

USD/DKK 5.4604

USD/SEK 7.8085

USD/NOK 6.4472

USD/TWD 32.880

USD/CNY 6.8210

10-Year Treasury Note Yield : 3.193%

Dow Jones Industrial Average : 8,410.81 -7.96