The US dollar is showing small gains this morning following the decent Q4 GDP data released. The number fell short of economists' expectation for an increase to 3.5% over Q3's 2.6% showing. The reading came in at 3.2% which is still a favorable number for the USD, lending support for the bourgeoning US economic recovery.

Though growth was less than expected, the data showed the biggest gain in consumer spending in more than four years with strong exports offering signals that a sustainable recovery is under way.

Analysts expect higher interest rates in other countries will keep the dollar on its downward trend, but some argue geopolitical tensions may offer support for the USD if political uncertainty in North Africa triggers risk aversion.

The euro is paring recent gains following today's US data release. This pause in the euros rise may be short-lived as inflation concerns still support interest rate increases out of the Euro zone, further highlighting a policy divergence with the United States.

Additional comments from French President Sarkozy underpinned the euro, in light of Euro zone debt concerns. Sarkozy defended the euro against skeptics at the World Economic Forum in Davos, saying he and Merkel would never let the currency fail.

The British pound is also off recent multi-month highs against the USD as concerns about a fragile UK economy weighed on sentiment.

The GFK NOP survey of consumer confidence fell 8 points in January to -29, the biggest drop since 1992 and the lowest reading in 22 months, hit by a rise in value-added tax and looming public spending cuts.

The Japanese yen rebounded, recouping some losses from yesterday's broad sell-off, which was triggered by a cut to the country's credit rating. The yen rallied to multi-week highs against the euro, supported by demand from exporters and speculators. Investors are optimistic that concern about the Japan debt downgrade will remain contained.

The Canadian dollar was softer against the U.S. dollar with little in the way of domestic drivers, solid U.S. growth data provided broad-based support for the greenback.

The New Zealand dollar was holding broad gains for the week as the mood on the economy seemed to lighten a little, while the Australian dollar lagged as the market scaled back expectations for interest rate rises this year.

The kiwi received a minor setback after the Reserve Bank of New Zealand Governor Alan Bollard said in a speech that there were a range of risks facing the economy, although the economic recovery was likely to pick up the pace. Bollard left interest rates on hold at 3% yesterday and reiterated his previous message that the central bank needs clear evidence of a sustainable recovery before rates would rise.

In Australia, the market has been pushing out the expected timing of another rate hike following a surprisingly benign inflation report this week.

Indications of Overnight rates:

EUR/USD

1.3746

USD/JPY

81.99

GBP/USD

1.5966

USD/CAD

0.9933

USD/MXN

12.0198

USD/CHF

0.9410

AUD/USD

.9985

NZD/USD

0.7793

10-Year Treasury Note Yield: 3.327%

Dow Jones Industrial Average: 11849.13 -120.94%

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.