The US dollar strengthened against most major currencies after initial unemployment benefits declined from a two-month high. The Labor Department data showed the number of applications for initial unemployment benefits declined by 19,000 to 457,000 in the week ended June 19. Furthermore, US durable goods orders have dropped 1.1%, a better-than-expected decrease from the forecasted 1.5% decline. Due to the global economic disparity resulting in investors flight to safety, the dollar has continued to strengthen even as US reports have shown declines.

In a two-day meeting, the Federal Reserve acknowledged the struggling pace of U.S. economic recovery and announced that interest rates will remain at its lowest levels for an extended period of time.

The euro slid further against the dollar after concerns over Greek's debt resurfaced and France's unemployment total rose 0.8% in May. The French ministry reported the number of jobseekers increased by 22,600 to 2,699,600 in May and was up 7.1% on the year. The data highlights the difficulty France faces in attempts to recover from the global recession.

The British Pound gained to its strongest level against the dollar since mid-May after Moody's Ratings said it would keep Britain's AAA rating if the government is able to implement its challenging new budget plan. The upbeat news brings support for the pound as it appeals to overseas investors. On the other hand, the cuts in government spending and the heavy tax hikes are expected to send Britain into a daunting economic period.

The Canadian dollar fell lower vs. the US dollar after the Federal Reserve announced the global economic growth will recover at a more staggering pace. In addition, weaker oil prices and global equities pressured the loonie away from previous near-parity levels against the greenback.

The Japanese yen gained broadly across the board as focus returned to the European debt crisis and investors took steps towards risk aversion. Domestically, Japanese export data dropped to 32.1% in May, a decrease from its previous month of 40.4%. Import data also reported a loss to 33.4% in May, a drop from its forecasted 34.2%. This suggests the demand for Japanese yen has been largely fueled by a flight-to-safety rather than economic fundamentals.

The Australian and New Zealand dollars fell versus the US dollar after the Federal Reserve's pessimistic outlook on the global economy weakened risk appetite. Meanwhile, Australia's first female Prime Minister Julia Gillard swore in as Kevin Rudd stepped down as Labor Party Leader as his position plummeted in recent opinion polls.

Indicative rates:

EUR/USD

1.2381

USD/JPY

89.10

GBP/USD

1.4981

USD/CAD

1.0391

USD/MXN

12.6735

USD/CHF

1.9975

AUD/USD

0.8722

NZD/USD

0.7131

10-Year Treasury Note Yield:  3.135%

Dow Jones Industrial Average:  10,233.14 -0.63%

This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.