The US dollar held within a tight range across the board continuing to benefit from concerns over the problems with Southern European countries.  Having little effect on the dollar was the release of March's trade balance number which came in slightly higher than expected at -40.4 Billion. 

With pessimism around potential further problems in Europe looming, look for the dollar to remain within a tight range ahead of unemployment data due out tomorrow and retail sales on Friday.

The euro held close to recent ranges after Spain announced additional spending cuts to help manage its budget deficit, while the release of GDP figures showed euro zone growth.  The gross domestic product (GDP) rose 0.2 percent quarter-over-quarter in the January-March period, for a 0.5 percent year-over-year increase.

Sterling fell 0.4 percent after the Bank of England indicated in its quarterly inflation report that UK interest rates will continue to remain low.  In other news, UK Conservative Party leader David Cameron became Britain's new prime minister after negotiating a deal between his centre-right party and Liberal Democrats. 

The Japanese yen held close to recent ranges as risk aversion continues to dominate the market.  Look for USD/JPY to hold below the key psychological level of 94.00

The Canadian dollar rose against the US dollar as oil prices stabilized coupled with investor's interest in Canada's strong fundamentals.  With oil holding above $76 a barrel, look for the loonie to continue to trade near parity.  

The Australian and New Zealand dollars weakened as Japanese investors unwound their long positions.  Also pressuring the currencies was news that China may further tighten its monetary policy.  Look for the kiwi to continue to hold close to current levels especially against the Aussie as the Reserve bank of New Zealand starts raising overnight rates next month.

 

 

Indicative rates:

EUR/USD

1.2718

USD/JPY

92.73

GBP/USD

1.4892

USD/CAD

1.0133

USD/MXN

12.4143

USD/CHF

1.1041

AUD/USD

0.8979

NZD/USD

0.7193

10-Year Treasury Note Yield:  3.571%

Dow Jones Industrial Average:  10,856.10 + 107.84