The US dollar rose for the second consecutive day against the euro following concerns about the funding needs of European banks. Domestically, the National Association of Realtors reported a fall in US home sales to -2.2% in May from its previous +7.6% in April. The Richmond Fed manufacturing index showed a drop of 3 points from last May; sales revenues index in May fell from 8 to 5; and June data showed retail sales dropped to -1 from 0 in May.

The euro fell broadly after concern over Eurozone debt worries resurfaced. The French bank Credit Agricole adjusted its profit expectations from Greek's Emporiki Bank and said it will take a 400 million euro ($536.7 million) writedown as Greece struggles to tackle its debt load. Additionally, Moody's Investor Services cut two Greek government-sponsored asset-backed securities. On other news, The Munich-based IFO reported that German business climate index rose in June to 101.8 from 101.5 in May, its highest level since May of 2008.

The sterling recovered gains versus the dollar as UK's Finance Minister George Osborne delivered his first budget to parliament. Osborne hacked the government's borrowing projections and is determined to reduce the deficit to 1.1% of GDP by 2015/16, while the current deficit is 11% of GDP. In addition to slashing government spending, the budget announces that VAT sales tax would increase and a new 2 billion pound levy will be added on banks in efforts to eliminate its deficit in five years.

The Canadian dollar rose against the US dollar followed by domestic inflation data that came in better-than-expected. Statistics Canada reported the consumer price index gained 0.3% in the month for an annual rate of 1.4%. The rate eased from 1.8% in April and was a hair above consensus forecast of 1.3%. The ease of inflation suggests less pressure on the Bank of Canada as it prepares to make its decision on interest rate hikes which is scheduled on July 20th.

The Japanese yen gained across the board as fears about European banks surfaced. The speculation that European banks will struggle to raise money, further slowing global growth, supports the demand for Japan's currency as a refuge.

The Australian and New Zealand dollars fell from gains after China set the yuan at stronger-than-expected levels. Markets are looking ahead for New Zealand's economic growth and deficit data to be released later this week.

Indicative rates: EUR/USD

1.2337

USD/JPY

90.23

GBP/USD

1.4882

USD/CAD

1.0170

USD/MXN

12.5131

USD/CHF

1.1083

AUD/USD

0.8755

NZD/USD

0.7054

10-Year Treasury Note Yield: 3.216% Dow Jones Industrial Average: 10,455.48 +0.13%

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.