The US dollar slid against the yen, following a rise in initial jobless claims from 460k to 479k in the week ended July 31.  The weak data further prompted speculation that the Federal Reserve will introduce stimulus measures next week.  Tomorrow's non-farm payroll data will provide more clarity to the near term direction of the dollar as this week's labor reports releases have been mixed so far.  The focus in tomorrow's data will be on private payrolls as a drop is expected due to the reduction in Census workers.

The euro rose earlier in the European trading session, however fell back towards yesterday's close of 1.3161 after ECB President Trichet commented during the press conference in Frankfurt that the second semester will be much less buoyant than the second quarter.  As expected, ECB held its interest rate steady at 1%. Meanwhile, Trichet remained confident for the most part, commenting that money markets are improving as the Eurozone's sovereign debt crisis subsides, adding further support to the euro for the near term.

The British pound dropped against the euro and dollar after the Bank of England held benchmark rate at a record low of 0.50%.  They also kept the size of their asset purchase program unchanged at 200 billion pounds.  Further putting pressure on the cable today was the 0.4% fall of FTSE 350 Bank Index and 4% drop of Barclay's shares.

The Canadian dollar rose to a 3-month high against the greenback today on speculation that tomorrow's employment data will post positive numbers following yesterday's rise in US ADP employment figures.  Further supporting the loonie is the speculation that Royal Dutch Shell may soon acquire Canada's largest natural gas producer, EnCana.  The focus, however, will remain on employment numbers released tomorrow - with unemployment expected to be unchanged at 7.9% and net change in employment at +12.5k vs 93.2k previously.

The Japanese yen appreciated against the majors today as risk aversion falls back into play.  Disappointing employment data out of New Zealand as well as the US spurred investors to seek the yen for safety.  On the data front, trade balance for June is scheduled for release on Sunday, with expectations of a significant rise to 800.9 billion yen vs the previous 391 billion yen.  If release holds up to expectation, investors may see further strengthening of the yen.

The Australian dollar gave up yesterday's gains against the greenback following the kiwi's drop due to weak employment figures.  The Aussie also fell on concern that China's bank stress tests will dampen demand for higher yielding currencies.

New Zealand's dollar dropped from a one-week high against the dollar after a report showed unemployment rate for the second quarter rose to 6.8% vs the previous 6.0%.  Employment also dropped by 0.3% vs a previous rise of 1%.  Poor jobless rate suggests the central bank may decelerate the rate of interest rate hikes going forward.

Indications of Overnight rates:
















10-Year Treasury Note Yield:  2.9005%
Dow Jones Industrial Average:  10,633.39 -50.03

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.