The US dollar continued its downward trend against the euro and pound, falling to a fresh 1-month low against the currencies following weaker-than-expected U.S. jobs data. The jump in U.S. jobless claims to their highest level since October dented optimism about the U.S. economy, exacerbating the dollars losses.
Today's successful Spanish bond auction eased some of the concern over the debt problems plaguing the euro zone's most-indebted countries, allowing for some room for the euro to strengthen 1.1% against the USD.
The euro rose against the dollar for a fourth straight day in a rally that could continue after solid Spanish and Portuguese bond auctions eased concerns about an escalation of the Eurozone debt crisis, though some analysts still believe that gains may be limited.
German Finance Minister Wolfgang Schaeuble said yesterday that Eurozone countries are working on a comprehensive package, which may be agreed by February or March, to solve the bloc's debt crisis. The euro remains vulnerable to selling if debt problems resurface.
The British pound climbed to a fresh one-month high against the dollar as expectations that a rise in UK interest rates may come sooner than expected.
The Bank of England kept rates at a record low but rising inflationary pressures and higher UK yields have prompted money markets to price in a strong chance of a rate hike as early as May.
British industrial output grew in November at its slowest annual pace since July, despite ongoing strength in manufacturing. Manufacturing output grew slightly faster than forecast, matching October's monthly rate of 0.6% which was the strongest since March.
The Japanese yen continues to trade within recent ranges against the majors
The Canadian dollar extended gains against the USD, despite a weak U.S. employment data report. Signs of stronger growth in the United States, the destination for most of Canada's exports, have helped the Canadian dollar higher in recent weeks.
Many traders believe that as long as oil continues to rise and the U.S. economy regains some footing, you should see some more selling of euro and buying of Canadian dollars.
The Australian dollar managed to stay afloat despite worse than forecast jobs data which saw December jobs increase only 2.3k compared to the 25k expected increase. Though floods are still pressuring the currency and economy lower, new jobs will be created to assist in the cleanup of the destruction.
Indications of Overnight rates:
10-Year Treasury Note Yield: 3.334%
Dow Jones Industrial Average: 11,744.96 -10.48%
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.