The US dollar weakened on easing risk aversion versus the euro after a government report showed the US economy expanded at a 3.2 percent annual rate in the first quarter as households spent more freely. This is setting the stage for gains in employment that may help the recovery broaden and accelerate. The Institute for Supply Management-Chicago Inc. also reported that its business barometer rose to 63.8 this month, the highest level since April 2005, from 58.8 in March. Consumer spending, which accounts for about 70 percent of the economy, rose at a 3.6 percent pace last quarter, compared with the 3.3 percent rate forecast by economists and a 1.6 percent gain in the prior three months. The increase was the biggest since the first quarter of 2007. As personal consumption improved to it's the strongest since the Lehman crisis, investors are feeling more encouraged by it as it reflects the fact that we're seeing the beginning of the process of a broad-based recovery.
The euro rose against the US dollar as expectations Greece will soon receive emergency aid helped to quiet jitters about how Athens will pay its debts. Investors were comforted by news that a multi-billion-euro aid package aimed at avoiding a Greek default may be announced in coming days. There have been some encouraging signs in terms of size and speed of the aid package to Greece, which for now are enough to support the single currency.
Sterling fell against the US dollar and a broadly firmer euro on growing optimism a multi-billion euro aid package aimed at avoiding a Greek default may be announced in the coming days. Although the pound had been pressured over the upcoming government election, the possibility that next week's UK election may provide a majority government were tempered by wider fiscal concerns.
The Japanese yen firmed against the US dollar as US stock declines accelerated. The yen also gained against most major currencies on continued worries over a looming aid package for debt-stricken Greece.
The Canadian dollar was little changed against the US dollar after data showed Canada's economy grew an as-expected 0.3 percent in February. Statistics showed it was the sixth consecutive monthly domestic increase, pushed higher by stronger manufacturing and the Olympics. Canada's growth rate seems solid which should continue to support the Canadian currency.
The New Zealand and Australian dollars held near their highest levels of the week against the US dollar as optimism about a quick rescue package for debt-stricken Greece supported risk sentiment. The Aussie was also received support as Australian data showed a 0.5 percent rise in private credit in March, the biggest monthly gain in over a year, while home prices climbed to new highs. In addition, speculation the Reserve Bank of Australia (RBA) will lift its cash rate by 25 basis points to 4.5 percent at its May policy meeting next Tuesday should keep the Aussie firm.
10-Year Treasury Note Yield: 3.694%
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