The US dollar strengthened vs. most major currencies as a fall in commodities and global equities increased risk aversion. Business activity unexpectedly expanded in October as the Chicago Purchasing Manager index climbed to a 13-month high of 54.2. The University of Michigan Confidence index was in line with expectations with a reading of 70.6 in October. The price index for personal consumption expenditures fell 0.5% in September. Investors will look ahead to November 4th to get an interest rate outlook from the Federal Reserve. The Fed will most likely keep interest rates at record lows from a range of 0 to 0.25%.
The euro weakened against the dollar as negative economic data hurt the currency. The Eurozone unemployment rate increased to 9.7% in September from 9.6% the previous month, which was in line with expectations. Retail sales in Germany, Europe's largest economy, decreased 3.9% in September from the previous year, much lower than forecast of a 2.2% fall. The European Central Bank will announce interest rates on November 5th.
The Sterling fell slightly against the dollar but is poised for a weekly gain after a report showed that consumer confidence rose to the highest level in 21 months. Consumer confidence had a reading of -13 in October, beating forecasts of -14. House prices rose 2.0% in October from the previous year, signaling that the economy is stabilizing. The Bank of England is expected to announce whether it will extend its debt purchase program when it makes its rate decision on November 5th.
The Japanese yen rose against the dollar after the Bank of Japan announced it will stop buying corporate debt at the end of the year. The Bank of Japan kept interest rates unchanged at 0.1%. Also helping the yen is the fall in equity and commodity prices, which increases the demand for safe haven currencies.
The Canadian dollar fell against the dollar with the fall in commodity prices and an unexpected decline in the nation's economy. A government report showed that the gross domestic product contracted 0.1% in August, lower than expectations of a 0.1% increase.
The Australian dollar and New Zealand dollar both declined against the dollar as a fall in global equities and commodities hurt demand for higher-yielding assets. Investors will be looking ahead to November 3rd to get further guidance on interest rate outlooks from the Reserve Bank of Australia. New Zealand's Home-building approvals rose 3.3% in September, lower than forecast 4%.
10-Year Treasury Note Yield: 3.4258%
Dow Jones Industrial Average: 9,824.05.29 -138.53