The U.S. dollar weakened slightly vs. most major currencies following unexpected decline in retail sales.  Retail sales fell 0.3% in December, versus a forecast increase of 0.5%.  Initial jobless claims increased 11,000 last week to 444,000.  Continuing claims fell to 4,596,000, the lowest level since January, 2009.  Business inventories rose 0.4% in November, slightly better than forecast at 0.3%.

The euro declined against the dollar as the European Central Bank left interest rates at a record low of 1%.  Greece's budget deficit problem continues to weigh on the euro, with German Chancellor Merkel saying that mounting Greek budget deficits may add pressure to the currency.  ECB President Trichet said that the Euro Zone outlook remains uncertain and that Greece's fiscal problems won't get special treatment.  Industrial Production in the Euro Zone increased 1% month-over-month in November, beating forecasts of 0.5%.

The Japanese yen rose against the dollar with the unexpected fall in US retail sales.

Sterling maintained its strength against the dollar from yesterday when Bank of England policymaker Andrew Sentence said in a newspaper interview that the central bank was close to reducing stimulus.

The Canadian dollar touched a 3-month high of 1.0247 against the dollar as it broke below a technical barrier 1.0300 this morning.  Traders increased their bets in the loonie as they believe that the currency will be helped by rising commodity prices from the global economic recovery.  The next Bank of Canada policy meeting is scheduled for January 19.

The Australian dollar rose to its strongest level in 2 months as a report showed that employers added jobs for a fourth month, increasing speculation that the central bank will raise interest rates in February.  Employers added 35,200 jobs in December, which was much higher than forecasts at 10,000.  The unemployment rate also fell unexpectedly to 5.5% in December, beating forecasts of a rise to 5.8%.

The New Zealand dollar strengthened against the dollar as home-building permits increased 1.2% from October.  The kiwi was helped by a move higher from the Aussie.

Indicative rates:

EUR/USD

1.4491

USD/JPY

91.05

GBP/USD

1.6320

USD/CAD

1.0261

USD/MXN

12.7169

USD/CHF

      1.0187

AUD/USD

0.9307

NZD/USD

0.7421

10-Year Treasury Note Yield:  3.7265%

Dow Jones Industrial Average:  10,701.33 +20.56