The US dollar weakened against most major currencies following Fed Chairman Ben Bernanke's comments on the economy. Earlier today, Bernanke stated that even with signs of recovery, the economy is on an unstable path. However, the economy is growing at a moderate pace and US GDP is expected to grow at a rate of 3 to 4% this year. Investors are anticipating US retail sales reports due June 11th.
The euro climbed against the dollar following options-related demand. Traders said the demand for the low priced euro triggered investors to buy the currency to protect their option positions. However, gains were likely limited due to the uncertainty surrounding global economic recovery. Analysts said the market was anticipating slow growth in the euro zone and expect the ECB to keep interest rates at a record low when it meets on Thursday.
The sterling weakened on the dollar followed by comments made by the Fitch ratings agency combined with UK's weaker-than-expected job growth data. The ratings agency highlighted Britain's need to cut government debt which stands at around 11% of GDP. Additionally, the Recruitment and Employment Confederation reported UK's permanent placements index fell to 61.3 in May, a decrease from 63.2 in April. A detailed emergency budget plan containing public sector spending cuts is due June 22nd.
The Japanese yen maintained strength against most major currencies as uncertainty in global recovery reinforces the yen as a safe-haven for risk adverse investors. Japan's consumer confidence index is due June 10th and reports for export in May due June 23rd.
The Canadian dollar rose against the US dollar following upbeat news indicating strength in the global economy. The unexpected growth in Chinese exports suggests strength in the global recovery. The loonie often rallies on the prospects of global economic growth because its role as a major exporter of oil and other commodities.
The Australian dollar gained against the US dollar after reports showed Chinese exports grew at a soaring rate of 50% from last year. Meanwhile, cautious tone from RBA's Governor Glenn Stevens' shared with weak domestic data reinforced expectations that interest rate will remain unchanged for now. TheNew Zealand dollar pared gains with the Aussie as the RBNZ is expected to increase interest rates from its record low 2.50%, this Thursday.
The Mexican peso rose for the second straight day following reports of China's export surge. Analysts said this suggested that the Euro debt crisis had little impact on economic growth in Asian nations.
10-Year Treasury Note Yield: 3.231%
Dow Jones Industrial Average: 10,050.25 +1.10%
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.