The US dollar strengthened to two-week highs against the euro and most major currencies after data showed US consumer confidence worsened in October. The Conference Board's US consumer confidence index fell to 47.7. Economists were expecting a reading of 53.1. Investors once again sought shelter in the greenback as a safe-haven and should continue to stay wary ahead of third-quarter US gross domestic product (GDP) data due on Thursday. Analysts expect the US economy to expand 3.3 percent in the third quarter. Anything lower could trigger another wave of selling in riskier assets, as happened with the shock GDP numbers from the UK late last week.
The euro gave up gains versus the US dollar as the single currency breached a key technical level, prompting a sell-off and after data showed US consumer confidence worsened in October. Investors have been using the euro as a proxy for risk appetite, selling the currency when economic data is negative.
Sterling strengthened broadly, mostly against the US dollar as the greenback's significant gains the previous day offered investors more attractive levels to sell again. Sterling's buying momentum also accelerated by its break above technical resistance at the 100-day moving average around $1.6360. Last week's shock news that the UK economy shrank in the third quarter, however, is capping the pound's rebound despite other upbeat data and comments from BoE policymakers instilling a degree of hope about a recovery in the UK economy.
The Japanese yen rose from a five-week low versus the US dollar on speculation Japanese companies are bringing back earnings on overseas assets before the end of the month. The move would strengthen the yen with exporters buying it.
The Canadian dollar was slightly weaker versus the US dollar, hovering near the three-week low reached overnight, as the impact from Bank of Canada comments still linger. On Monday, Governor Mark Carney added to an already cautious tone when he reiterated a warning he gave last week that the Canadian currency's rally toward par with the greenback was a risk to growth. The commodity condition is somewhat positive, however, as gold prices edged off a three-week low while oil prices moved above $79 a barrel after three sessions of decline. Commodity prices often influence the Canadian dollar given the nature of Canada's exports.
The Australian dollar stayed well below recent 14-month peaks, hurt by renewed risk aversion with disappointing US consumer confidence data. The New Zealand dollar weakened against the US dollar as risk appetite receded ahead of the Reserve Bank of New Zealand's interest rate review later in the week, with the focus on any comment on when rates may begin to rise. A firmer US dollar and weaker equity markets and commodity prices have helped put high-yielding currencies such as the Aussie and kiwi on the back foot.
10-Year Treasury Note Yield: 3.516%
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