The US dollar pared gains against the euro and fell against the currencies of commodity-producing nations from South Africa to Australia as global stocks rose and oil traded near the highest level in more than a week. Although markets showed little reaction to data showing prices for US single family homes rose for the eighth straight month in January, the release of US consumer confidence data boosted optimism in the market. Confidence among US consumers climbed in March as Americans perceived employment was starting to improve. The Conference Board's confidence index rose to 52.5, exceeding the median forecast of 46.4 in February.
The euro pared losses after data showed US consumers were feeling more confident about the future in March, giving a slight boost to investor risk sentiment. The single currency also hit a two-month high against the yen on relief that Greece was able to raise funds from the market, though gains were quickly trimmed as wider euro zone fiscal concerns weighed on sentiment. The euro should continue to trade with a limited upside potential given that the euro zone's debt problems and weak growth mean the European Central Bank is in no rush to hike interest rates.
The British pound rose against the US dollar and euro as data showed the UK economy growing a bit more swiftly than expected while the euro surrendered earlier gains against the dollar and yen amid worries about euro zone fiscal health. Britain's currency was on track for its best day against the greenback in nearly two weeks after revised GDP data showed the economy grew 0.4 percent in the fourth quarter. A separate report also showed UK house prices rose in March.
The Japanese yen initially edged up against the US dollar as Japanese exporters repatriated their overseas earnings, but the buying of US dollars for Japan's new fiscal year starting on Thursday also seemed to emerge and later limited the yen's advance. Risk tolerance seems to be improving gradually, given firm stocks and commodity prices as well as a temporary easing of concerns about Greece.
The Canadian dollar rose to a near one-week high against the US dollar, buoyed by positive risk sentiment and firmer resource prices. Commodity-linked currencies were strong performers overnight on the back of firmer base metal prices and on a rise in the price of oil, a major Canadian export. The Canadian dollar was also supported by a positive tone from world stocks.
The Australian dollar rose to its strongest level in more than a week on heightened speculation of interest rate rises next week, firm Asian stocks, and news of hefty contract price hikes for miners. The rally was sparked in part by a commentary from influential RBA watcher Terry McCrann, who had argued it would be extraordinary for the RBA to not lift rates next week. The New Zealand dollar was firmer against the US dollar, tracking a stronger Australian dollar amid expectations of another interest rate hike in the neighboring country next week. The kiwi, however, was weaker against the Aussie as the interest rate differential between the two currencies will widen if the Reserve Bank of Australia hikes rates again next week. Australia's key rate is at 4.0 percent, compared with New Zealand's 2.5 percent.
10-Year Treasury Note Yield: 3.878%
Dow Jones Industrial Average: 10,881.57 - 13.08