The US dollar fell against a basket of currencies following data that showed a rise in jobless claims and a fall in consumer prices. The Labor Department reported that initial claims for unemployment increased 12,000 to 472,000 last week. In another report, the Consumer Price Index fell 0.2% last month, the biggest decline since December 2008. Analysts expect the Federal Reserve will maintain interest rates near zero until next year.
The euro rose to a near three-week high against the dollar as a result of Spain's robust bond auctions which somewhat eased fears surrounding the European debt crisis. Solid demand for Spanish government bond auctions has subsequently boosted sentiment for riskier assets. The euro's rebound against the greenback has gained over 2% so far this week. Investors are anticipating European leaders to publish details of stress tests showing the financial health of big banks in the Eurozone next month.
The British pound eased from its one-month high and is trading flat against the dollar. Earlier gains created by an improved risk appetite have lost momentum as analysts caution the effects of UK's fiscal cuts ahead. The sterling was supported by improved UK retail sales and a lower than expected budget deficit in May. Britain's new finance minister George Osborne is set to release his first budget proposal next week.
The Canadian dollar weakened against the US dollar following soft oil prices hit by signs of slower global economic growth. Crude oil prices fell more than $1 to below $76 a barrel as a warning from a Chinese central bank advisor reported that economic growth was expected to slow in the second half of this year.
The Japanese yen gained on the dollar after Japan's ruling party announced economic improvement plans. Japanese Prime Minister Naoto Kan announced a plan to restore growth, end deflation, and shrink the budget deficit to contain the nation's oversized debt. Investors are anticipating Japan's unemployment rates and retail sales to be released next week.
The Australian and New Zealand dollars reached a one-month high as the ease in European debt fears gave rise to higher-yielding currencies. The Aussie gained nearly 2% this week amid similar gains made by the euro which rose to a near three-week high.
10-Year Treasury Note Yield: 3.225%Dow Jones Industrial Average: 10,460.77 +0.25%
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.