Daily Foreign Exchange Market Summary

By IBTimes Staff Reporter | July 14 2010 12:16 PM

The U.S. dollar is bouncing around within recent ranges as investors are uncertain about which direction to push the euro. Yesterday's return to riskier trades was stymied after unexpectedly weak U.S. retail sales data drove stock futures lower, raising concerns that the U.S. economic recovery may be slowing. Additionally, talk of a possible debt downgrade for Spain weakened investor risk appetite.

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Investors are bracing for the Federal Reserve to trim its growth forecast when minutes from its most recent policy meeting are released this afternoon. There is also speculation policymakers may have discussed further easing measures.

Market analysts note that funds were increasingly moving out of cash and low-yielding U.S. Treasuries to buy the euro and growth-related currencies. Investors were encouraged after smooth auctions of German and Portuguese bonds, following a successful sale of Greek government paper on Tuesday.

The euro is hovering within recent ranges after climbing to a fresh 2-month high overnight. Earlier in the week, Moody's cut Portugal's debt rating by two notches, heightening worries about debt levels in several euro zone countries. With the possibility of a Spanish downgrade on the horizon, traders are wary to make any big moves, though euro within the 1.30 range is not out of the picture.

The sterling extended gains to a 10-week high as data showing a fall in UK unemployment added to speculation that the Bank of England may need to start thinking about raising interest rates.

With oil retreating below $77 a barrel, dropping from a 2-week high, the Canadian dollar fell from its recent peak against the USD. As the markets appetite for risk returns, the loonie should remain firm.

Amidst current market turmoil, the Japanese yen has remained firm and strengthened against the USD and EUR.

The Australian and New Zealand dollars fell victim to a bout of profit taking as traders booked gains on the recent moves. A double dose of sluggish retail and housing data hurt the New Zealand dollar. Kiwi investors await second quarter inflation figures on Friday.

Indicative rates:

EUR/USD

1.2735

USD/JPY

88.20

GBP/USD

1.5291

USD/CAD

1.0292

USD/MXN

12.6694

USD/CHF

1.0539

AUD/USD

0.8853

NZD/USD

0.7219

10-Year Treasury Note Yield: 3.097%

Dow Jones Industrial Average: 10,381.26 +18.24

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.