The US dollar strengthened against a basket of currencies as investors trimmed risk positions in higher-yielding currencies as stocks fell on weaker than expected US data. A report showed US new home sales for September fell, showing sales of newly-built homes declined unexpectedly last month, falling 3.6 percent to 402,000 annual pace. Data also showed core US durables goods orders -- excluding transport equipment -- were better than expected in September. The report showed orders for US durables goods rose 1.0 percent, in line with forecasts, and the ex-transportation number was higher than expectations at 0.9 percent.
The euro fell to a two week low against the US dollar as weaker-than-expected US data prompted a sell-off in higher-yielding currencies. The single currency continues to extend its losses as it remains a proxy for risk appetite.
Sterling fell across the board as lower equities and oil prices encouraged investors to trim exposure to currencies perceived as higher risk. Tuesday's much weaker-than-expected US consumer confidence data along with today's lower US new home sales data increased concerns over the extent of the global economic recovery, weighing on equities and triggering flows into currencies such as the greenback and the yen. UK retail sales, however, rose more than expected this month, but analysts are likely to remain cautious ahead of next week's Bank of England decision amid uncertainty over whether it will increase asset purchases.
The Japanese yen strengthened across the board as global shares deepened their slide, prompting currency traders to trim positions and reduce risk exposure. The low-yielding yen also received a boost with a slide in European shares, led by declines in the banking and energy sectors.
The Canadian dollar fell to its lowest level in over three weeks along with a drop in other commodity-linked currencies given a slide in the price of oil and concern about corporate earnings. The price of oil, a key Canadian export whose price often influences Canada's currency, fell below $79 a barrel given a weaker equity backdrop and a stronger US dollar.
The Australian dollar dropped to two-week lows as investors pared bets of a steep interest rate hike next week after measures of core inflation favored by the central bank did not increase by as much as some had hoped. The Aussie fell after investors decided that Australian inflation data was not strong enough to warrant a big increase in Australian interest rates with the outcome most likely in line with a 25 basis point move versus a 50 point move. The New Zealand dollar followed the Australian dollar lower today but tomorrow the focus will be on the Reserve Bank of New Zealand's interest rate review.
10-Year Treasury Note Yield: 3.411%
Dow Jones Industrial Average: 9,851.71 - 31.82