The US dollar was buoyed after its recent gains against a basket of currencies as investors continue to buy back the safe haven currency amid hopeful economic news. Data from the Labor Department showed initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 442,000 last week, boosting hopes of recovery in the labor market.
The euro recouped some of its losses against the dollar, but remains near 10-month lows. At the European Union leader's summit today, representatives appeared to be nearing consensus on an aid mechanism for Greece based on Germany's terms. German Chancellor Angela Merkel said she was not against aid for Greece as a last resort, but the terms had to be based on strict German terms and involve the International Monetary Fund. European Central Bank President Jean-Claude Trichet announced the central bank would extend looser collateral rules to Greece. On the data front, GfK market research group reported German consumer confidence held steady at 3.2 going into April, as households' view of the economy brightens. Think-Tank ISAE reported Italy's March business confidence rose less than expected to 84.1, confirming the trend towards a gradual improvement but at very low levels.
The British pound hit a one-month high vs. the euro but remains at weaker levels against the dollar. Data from the Office for National Statistics reported retail sales jumped 2.1% in February, the biggest increase since May 2008. This bounce back in retail sales was 3 times what analysts had forecasted.
The Japanese yen continued to weaken as Bank of Japan policy board member Hidetoshi Kamezaki left the door open to more monetary easing. He warned that deflation was likely to linger for some time and it is starting to affect public perceptions about future price moves.
The Canadian dollar held steady, supported by rising commodity prices and a speech by Bank of Canada Governor Mark Carney. Carney said the bank is monitoring firm inflation numbers. He further stated higher than expected consumer prices in Canada have been the result of underlying economic strength. Carney's comments led market players to believe he was more hawkish on raising interest rates.
The Australian and New Zealand dollars bounced from overnight lows after hawkish remarks from the Reserve Bank of Australia hinted towards further domestic interest rate rises. Many market players are expecting the RBA to raise interest rates by 25 basis points. The Aussie and the Kiwi was also supported by stronger commodity prices.
10-Year Treasury Note Yield: 3.847%
Dow Jones Industrial Average: 10,899.33 + 63.18