The US dollar rallied across the board after more Euro zone woes and mixed economic news. As the Euro zone struggles with debt-ridden Greece, credit rating agency Fitch downgraded Portugal's rating, prompting investors to flee riskier assets back into the safe-haven dollar. Data from the Commerce Department reported new orders for durable goods rose for the third straight month by 0.5% in February, pointing to continued strength in manufacturing. Contrastingly, new home sales fell for the fourth straight month by 2.2% to a 308,000 unit annual rate in February.
Euro hit a 10-month low after credit rating agency Fitch downgraded Portugal by one notch to AA- citing budgetary underperformance in 2009. This fueled more concerns over debt sustainability and growth in some of the Euro zone's smaller countries. With the European Union summit starting their two day meeting tomorrow, watch the euro to remain under pressure. Data from the European Union statistics office Eurostat reported industrial orders in the 16 countries fell unexpectedly in January by 2%.
The British pound fell to a two-week low vs. the dollar as UK finance minister Alistair Darling presented the government's budget. Darling cut his borrowing forecasts and announced a GBP 2.5 billion ($3.75 billion) package to promote growth in the last budget before an election just weeks away.
The Japanese yen weakened after US manufactured goods rose for the third straight month in February. Japan reported overall exports slipped 1.7% in February, but a big rise in auto shipments to the US showed exports are continuing to pick up on the back of a recovery in the global economy.
The Canadian dollar lost its recent gains as oil prices and equity prices softened on investors' worries about sovereign debt. Though the fundamental picture for the loonie remains positive, the currency fluctuation will be influenced by external factors for the time being.
The Australian and New Zealand dollars came off of their recent highs vs. the US dollar as commodity prices softened and investors' flocked to the safe-haven US dollar. With Portugal's credit rating downgrade and Greece's debt woes looming over the Euro zone, investors' sold riskier assets which further pushed the Aussie and the Kiwi lower.
10-Year Treasury Note Yield: 3.768%
Dow Jones Industrial Average: 10,872.65 - 16.18