The US Dollar is mixed against a basket of currencies as the weekend approaches. Meanwhile, U.S. Treasury Secretary Timothy Geithner urged EU finance ministers to better-leverage their bailout fund but has not been able to see entirely eye-to-eye with them. Domestically, the Thompson Reuters/University of Michigan's preliminary reading on consumer sentiment edged up to 57.8 from 55.7 m/m in early September, which had been the lowest level since November 2008. The data of consumer expectations slid to 47.0 from 47.4 m/m and the economic outlook for the next 12 months dipped to 38 from 40, the lowest since May 1980 and February 2009 respectively. Even as consumer sentiment inched up in early September, Americans remained wary about the future of the US economy.
The euro reversed recent gains against the USD as Greek debt-rollover only collected about 75% of Greece's private sector participation. Greece had aimed to attract 90% participation from the private sector to agree in taking a 21% cut under a voluntary debt exchange for about 150bl euros of Greek government debt.
Domestically, the European Union's statistics office Eurostat reported a higher than expected trade surplus of 4.3bl euros in July, from the forecasted 2.0bl euros. In addition, the RWI Institute reported Germany's economy will grow 2.9% this year which is higher than its expected growth of only 2.5%.
The British pound extended a slight loss against the USD as Eurozone debt concerns resurfaced and UK's economic data reported consumer's mood deteriorated. UK's retail sales report posted -0.2% m/m and -0.6% y/y in August, an overturn from the previous +0.2% and +0.6% rise, respectively. Along with the weakening consumer confidence, lackluster retail sales may have been contributed by the rioting in several English cities in August with many shops losing money and having to close early during the four days of looting and violence. In addition, Britons have suffered the biggest drop in incomes in 30 years as the economy struggles to recover from its deepest downturn in decades, forcing consumers to cut spending. Meager economic data global uncertainty has weakened the GBP -0.04% against the USD this week.
The Japanese yen extended slight losses against its traditionally safe-haven US dollar counterpart but the yen remained near levels that could cause the Bank of Japan to intervene to control its overall strength.
The Canadian dollar continued to strengthen against the USD followed by the rally of commodity currencies, AUD and NZD. Despite the limited news coming from Australia this week, investors have narrowed the odds of possible rate cuts ahead as Australia's employment unexpectedly fell in August and the jobless rate ticked up to a 10-month high. As for the loonie, investors will being paying close attention to Canada's CPI, retail sales, and FOMC speech, all due to release next week.
Indications of Overnight rates:
10-Year Treasury Note Yield: 2.086%
Dow Jones Industrial Average: 11490.32 + 56.61
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..