The US dollar held gains over most major currencies in spite of lower than expected Consumer Price Index. The Labor Department reported that its seasonally adjusted CPI dipped 0.1% in April due to a decline in energy costs. The first decline in a year suggests the Federal Reserve may keep interest rates near zero for some time. Look to the data release of US jobless claims tomorrow to further gage the direction of the greenback.
The euro shifted from a four-year low against the US dollar to a session high on as investors await upbeat news on the reversal of the single-currency. Germany's ban on naked short selling created volatile trading by investors. The ban, which expires March 31st 2011, is an effort to calm financial markets. This ban prohibits investors to outright sell European government bonds without prior ownership. News of the ban caused stocks around the world to drop and forced the euro trade lower against the dollar.
The British pound fell to a 14-month low against the US dollar due to concerns over the new UK government's ability to tackle the deficit and expectations that the Bank of England would hold interest rates down for some time.
The Japanese yen gained against the dollar and most major currencies on escalated risk aversions brought forth by the European crisis. The Yen broke through the 100-day moving average of 91.60 and is likely to move lower.
The Canadian dollar fell to its lowest in more than a week against the US dollar after investors extended their concerns over the submerging euro currency. The loonie was further dragged down following the drop in oil-prices which slid to its lowest in more than seven months to $68 a barrel.
The Australian dollar weakened further after statements released earlier this week by Reserve Bank of Australia (RBA) suggested that rates may remain stagnant for the next few months.
Downbeat comments from The Reserve Bank of New Zealand (RBNZ) pressed the New Zealand dollar to an eight-month low vs. the US dollar today. The RBNZ said in its Financial Stability Report that a lower kiwi was desirable for the country and will help to ease imports and boost exports.
10-Year Treasury Note Yield: 3.335%
Dow Jones Industrial Average: 10,505.70 + 22.52