The US dollar is volatile today. The dollar reversed most of its overnight gains against a basket of currencies as Wall Street looked to open higher. Investors were encouraged by US President Barack Obama’s positive comments Tuesday night after he said he was seeing some progress in efforts to pull the economy out of crisis and an unexpected rebound in durable goods orders in February showing signs the economic downturn was moderating. Though positive sentiment emanated throughout investors, moves were capped as cautious investors mulled over the effectiveness of removing toxic assets from bank balance sheets to spur an economic recovery.
This morning, US Treasury Secretary Timothy Geithner said he was “quite open” to China’s suggestion of moving toward SDR-linked currency system, which pushed the dollar down against most currencies. However, soon there after the dollar recouped those losses.
The euro initially strengthened against the dollar overnight after comments from Eurogroup head Jean-Claude Juncker, but erased most of those gains as German business morale fell. Juncker said Europe is not prepared to boost spending beyond stimulus measures that have been announced, as he felt that the stimulus plans are strong, demanding and significant in terms of volume and quality. Data from the Ifo economic research institute said its business climax index which consists of a monthly poll of around 7,000 firms fell to 82.1 in February, on concerns that Europe’s largest economy has yet to bottom out from the recession.
The British pound hit a session low against the dollar and euro after weaker than expected retail sales data. Data from the Confederation of British Industry's distributive trades survey balance fell to -44 in March, signaling a contracting economy. These figures are expected to worsen further as the bleak economic outlook makes consumers cut back on spending.
The Japanese yen weakened against the dollar overnight, but rebounded in early morning trade. Japan’s exports posted another drop in February as global demand for Japanese cars and electronics diminish in the midst of the global financial crisis.
The Canadian dollar remains rangebound against the US dollar as US equity markets looked to open higher, though oil prices dropped. Since the domestic economic data is bare this week, the loonie movement will be from equity and commodity markets
The Australian and New Zealand dollars touched highs against the US dollar after Geithner’s agreement with China to move towards a SDR-linked currency, but recoiled within a matter of minutes. Though the Aussie and the Kiwi have maintained their recent gains against the greenback, many investors are beginning to grow wary as appetite for risk appeared to wane.
10-Year Treasury Note Yield: 2.735%
Dow Jones Industrial Average: 7,832.49 + 171.08