The US dollar rallied versus most major currencies as it continues to be supported by recent positive data from the US services sector, housing market, and jobs report which highlighted that the US economy is recovering. In contrast, renewed concerns over Greece's debt crisis are weighing on the euro zone and the UK continues to deal soft economic data and political uncertainty.
The euro dropped against the US dollar to its lowest in more than a week on renewed concerns over Greece's ability to tackle its debt crisis. The single currency has come under pressure this week following reports that Greece wanted to renegotiate a deal reached last month over joint aid from the EU and International Monetary Fund. Also, revised data showing euro zone growth stalled in the last quarter of 2009 also weighed on the euro. The GDP data, even though it is backward-looking, shows the euro zone is in a difficult situation and as long as these issues of confidence remain in the market, the single currency will remain under pressure.
Sterling fell after weaker-than-expected data on the UK's dominant services sector and pared gains from an earlier six-week high versus a broadly weaker euro. March's headline services purchasing managers' index fell to 56.5 from 58.4 in February and economists had forecast a much smaller drop to 58.0.
The Japanese yen reversed early gains and fell against the greenback. The yen has lost about 11 percent of its value since hitting a 14-year high of 84.82 yen last November. Expectations that the Federal Reserve will easily beat the Bank of Japan in raising interest rates should continue to keep the yen on a downward trend.
The Canadian dollar continued to test parity against the US dollar, hitting a near 21-month high a day after reaching one-for-one footing. Investors are now cautious as to whether the commodity-linked currency's rise has more than momentum behind it as oil prices slipped from 18-month highs and euro zone worries persist.
The Australian dollar held broadly firm as the prospect of more rate increases at home and rising commodity prices globally pushed it to 11-week highs against the US dollar and against most major currencies. The New Zealand dollar firmed against the US dollar, holding on to a one-cent gain made after key exporter Fonterra reported a jump in international dairy prices. Fonterra, New Zealand's largest company accounting for about a quarter of all exports, said milk prices rose 21 percent at its latest auction, on the back of tight supply.
10-Year Treasury Note Yield: 3.968%
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