The US dollar traded lower against most major currencies on improved appetite for riskier assets and weaker-than-expected US home builder's index. According to the National Association of Home Builders, builders were discouraged following the expiration of tax breaks that were offered to home buyers. The overall index fell at its fastest pace since November 2008.
The euro gained against the dollar following solid demand for European debt in auctions held in Ireland, Belgium and Spain. However, the negative effects of the euro debt crisis resurfaced after Moody's ratings downgraded Greece's bonds to junk status and following the poor ratings from German ZEW's investor sentiment survey.
The British pound strengthened against the dollar as risk appetite improved. Even as UK's consumer price inflation showed lower-than-expected data, investor's appetite for riskier currencies created a rebound for the sterling. Anticipate UK's retail sales and jobs data to be released this week.
The Canadian dollar climbed higher against the US dollar following strong demand for European debt and firmer energy prices. Crude oil was priced above $75 dollars a barrel while natural gas rose over 2%. Investors are anticipating upbeat news from Bank of Canada's Governor Mark Carney who is scheduled to speak tomorrow.
The Japanese yen weakened across the board on improved risk appetite. Domestically, the Bank of Japan left rates on hold and introduced a new $33 billion dollar industry-lending program, due this August, which is aimed at raising productivity and creating consumer demand.
The Australian and New Zealand dollars fell from its highs following comments from the Reserve Bank of Australia which suggested that it would not raise interest rates any time soon. In New Zealand however, investors are expecting the central bank to continue to raise rates this year, after last week's rate increase in three years. Anticipate New Zealand's consumer confidence index, to be released this Wednesday.
10-Year Treasury Note Yield: 3.297%
Dow Jones Industrial Average: 10,306.30 + 1.12%
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.