The US dollar traded lower against most major currencies following a survey that showed a drop in US factory activity. The Philadelphia Federal Reserve Bank reported that business activity index dropped to 8.0 in June from May's 21.4. Although economists expected a reading of 20.9, any reading above zero indicates expansion in manufacturing, suggesting that the US factory sector is still at moderate growth.
The euro climbed against the dollar after firm Spanish bond sale which undermined worries about the country's fragile economy. Spain sold 3.5 billion euros of 10 to 30 year government bonds. The powering purchase of the higher yielding government bond eased worries about Spain's debt troubles. The market is still cautious over the condition of Spanish banks and is anticipating results of the bank stress tests conducted by the Spanish central bank.
The British pound gained against the dollar after reports of higher-than-expected UK retail sales. British retail sales doubled to 0.6% in May from the previous month. UK's inflation hit a 17-month high of 3.7% in April but has eased to 3.4% in May. Bank of England Governor Mervyn King commented that ordinarily, price would increase by factors of wage inflation, rapid increases in money spending, and an excess of demand over supply capacity of the economy, and the UK economy exhibits none of these traits.
The Canadian dollar climbed higher against the US dollar after investors took on more risk following the strong demand for Spanish bonds. Domestically however, Statistics Canada data indicated an unexpected decrease in wholesale trade to total -0.3% in April, less than the forecasted 0.4%, and much less than March's reading of 1.4%.
The Japanese yen rose against the dollar after a survey showed a drop in US business growth. As a major competitor in the role as a safe haven currency, the yen is known to rally against the greenback on poor economic reports out of the US.
The Australian and New Zealand dollars eased from the week's high against the dollar as investors were seen selling for profits rather than taking on more risk by holding the currency at key resistance levels. Latest report from ANZ-Roy Morgan's New Zealand consumer confidence index showed a drop of four points to 122, the first decline in three months. The survey suggested that consumers have been doubtful of a smooth economic recovery.
10-Year Treasury Note Yield: 3.200%
Dow Jones Industrial Average: 10,361.54 -0.46%