Daily Summary on USD, Euro, GBP, JPY, CAD, AUD and NZD

v GBP touches new 2012 high boosted by EUR weakness

v Commodity Currencies were mixed ahead of BOC testimony and weak inflation figures out of Australia

The USD was mixed this morning after the release of lackluster consumer confidence figures and ahead of the highly anticipated FOMC (Federal Open Market Committee Meeting) that gets underway today. Consumer confidence came in at 69.2 today just off an expected reading of 69.7. The market's focus will turn to Chairmen Ben Bernanke's comments due out tomorrow. Expectations are that the Fed will maintain its dovish stance even as forecasts look to improve. Look for the dollar to remain under pressure, with the Fed starting to halt the reinvestment of Mortgage Backed Securities and as expectations are for the Fed to announce that the benchmark for interest rates will continue to remain low.

The EUR strengthened, but held close to recent ranges despite the news that the Spanish economy contracted by ?0.4% q/q. Also helping the single currency was the successful sale of Spanish, Italian and Dutch denominated bonds which alleviated some pressure on rising yields. Look for the single currency to hold close to current ranges.

The GBP pushed higher touching a new 2012 high as the pound continues to benefit as investors seek the UK's AAA sovereign rating. The market will look towards tomorrow's GDP release for further direction into the GBP/USD currency pair.

The JPY is little changed from yesterday's close as market participants start to square up positions ahead of this week's FOMC and BOJ meetings. With BOJ expected to release the announcement of further asset purchases of ¥5trn to ¥10trn. BOJ will most likely focus its asset purchases on longer?dated government bonds in order to meet its 1.0% CPI target.

Commodity currencies fell broadly against the USD with the exception of the CAD. Despite softer retail sales in Canada, the Loonie strengthened, supported by Central Bank Governor Mark Carney, who has reiterated a positive outlook for the domestic economy. The Australian dollar slid past 0.5% after government data showed inflation was slowing to record lows. Asian stocks and composites slipped 1.4%, adding further pressure to the Aussie. In addition, the very soft CPI report has led the RBA to signal that it may consider cutting its 4.25% cash rate in May if inflation remains static. The New Zealand dollar slightly weakened as investors await the RBNZ policy review on Thursday. Markets have no anticipation of a rate move but will focus on how dovish the statement will play into the currency.

04/24/2012

CURRENT

CHANGE FROM CLOSE

EUR/USD

1.32205

0.37%

USD/JPY

81.20

0.00%

GBP/USD

1.6140

0.05%

USD/CAD

0.9878

0.33%

USD/MXN

13.1550

0.16%

USD/CHF

0.9100

0.39%

AUD/USD

1.0372

-0.23%

NZD/USD

0.8112

-0.24%

USD/ZAR

7.7810

0.56%

USD/SEK

6.7385

0.25%

USD/CNY

6.3075

0.01%

10-Year Treasury Yield:

1.95

0.05%

Gold:  

1,641.30

0.04%

Copper:  

377.69

0.08%

Crude Oil: 

103.60

0.02%

DJIA:

13,008.34

77.42

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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.