The US dollar tumbled further after a slower rise in U.S. manufacturing is expected this morning, which suggested that U.S. interest rates will remain low for now. Though new jobless claims came in lower than anticipated, markets are keeping the dollar's gains limited.
There is some speculation that Fed officials are considering using next week's policy statement to suppress any speculation they are prepared to increase interest rates.
Concerns that the US dollar may lose its status as the main global reserve currency continue to cap any dollar gains.
The euro remains supported by a weaker US dollar. The euro moved higher against 12 of the 16 major currencies on speculation ECB officials speaking tomorrow will signal they plan to keep interest rates on hold, maintaining the allure of assets in the 16-nation region.
The British pound fell against the dollar and hit a one-week low against the euro, after data showed UK retail sales unexpectedly fell, raising doubts about economic recovery.
The sterling had surged recently on expectations the UK economy would quickly emerge from its deepest recession in decades.
UK retail sales fell 0.6% in May, against a forecast of a 0.4% gain. That left them 1.6% lower than last May.
Comments from BoE Governor Mervyn King, who said that there were some signs the British economy was starting to stabilize, but it was too early to remove the huge degree of stimulus from the economy, had little effect on the market.
Meanwhile, a Bank of England report showed lending to British businesses fell by its biggest amount in nearly nine years in April in a sign the credit crunch is still hitting companies hard.
The Japanese yen is under pressure from the USD this morning after data showing a decline in U.S. continuing jobless claims in the latest week surprised the market.
The Canadian dollar edged higher against the U.S. dollar after domestic inflation data showed annual inflation slowed in May but was still higher than market expectations. Canada 's annual inflation slowed in May to its lowest in nearly 15 years
Currency market players will next be watching for a speech from Bank of Canada Governor Mark Carney later today. The speech will be monitored for new remarks on the recent rapid appreciation of the Canadian dollar. A stronger Canadian dollar, and its quick ascent, adds pressure to an export-oriented economy.
Meanwhile, the Australian dollar remained in a tight range, limited by cautious investors who want to see more evidence the world economy is on the mend before buying additional riskier currencies.
The Aussie has retreated 3.8% since hitting an eight-month high on June 3, but is up 27% from the years low.
The New Zealand dollar also trimmed gains after its central bank Governor Alan Bollard said recent gains were preventing its economy from recovering from its longest recession in over three decades. New Zealand 's exports had been stuck in a recession for the last five years, hurt by rising costs and higher exchange rates.
Next week, New Zealand 's first-quarter gross domestic product, current account and consumer sentiment figures will be eyed for the latest health check on the recession-hit economy.
10-Year Treasury Note Yield : 3.751%
Dow Jones Industrial Average : 8,502.63 +5.45