The US dollar tumbled on optimism the global economy will recover soon, reducing the greenback as a safe haven. The Dow, Nasdaq and S& P 500 all reached new 2009 highs after existing home sales rose 7.2 percent in July, the fourth straight month indicating that homes are selling fast. Meanwhile, Federal Reserve Chairman Ben Bernanke said there is a good chance the overall economy could grow soon, but warned that unemployment in the United States would remain at high levels. Thus, recovery will come slowly. The markets fear that rising unemployment will dent consumer spending and America needs consumers to spend to help prop up the ailing economy.

The euro rallied after German services and French manufacturing unexpectedly jumped in August, the first time in a year, providing evidence the global recession is easing. Eurozone service sector and manufacturing activity also jumped. Positive data is benefiting the euro despite some worries about the impact of a potential economic slowdown in China.

The British pound stormed higher, benefiting from positive news elsewhere in the world. The sterling took a beating earlier this week after Bank of England minutes revealed some policymakers had wanted to increase quantitative easing as early as this month. The news raised worries that the British economy may take longer to recover.

The Japanese yen is trading lower on global recovery hopes. This optimism contrasts with Japan's economy. Bank of Japan board member Atsushi Mizuno recently said the recovery in the country's export sector could slow during the fall and that a sustained recovery would call for support from governments and central banks.

The Canadian dollar gained after crude oil rose to a year high of $74 a barrel. Federal Reserve Chairman Ben Bernanke suggested the US economy is on the road to recovery also boosted the Canadian unit.

The Australian and New Zealand dollar also rose as the price of oil reached its highest level in 2009, helping to boost investor risk appetite. However, gains were capped after Moody's Investors Service repeated its concerns about the worsening financial status of many of Australia's states and said downgrades could not be ruled out. Meanwhile, New Zealand's prime minister said a strong currency could hinder a recovery.

Indicative rates:
EUR/USD 1.4292
USD/JPY 94.55
GBP/USD 1.6489
USD/CAD 1.0818
USD/MXN 12.8270
USD/CHF 1.0626
AUD/USD 0.8345
NZD/USD 0.6825
USD/DKK 5.2096
USD/SEK 7.0400
USD/NOK 6.0160
USD/TWD 32.890
USD/CNY 6.8312

10-Year Treasury: 3.5332%
DJIA: 9,487.06 +137.0