The US dollar took a dive against the Japanese yen today, falling 1.2 percent after disappointing US economic reports were released. Initial jobless claims data grew to 496,000 from a previous 473,000, currently at the highest level since November. Furthermore, yesterday's housing data showed disappointing figures, with investor's mortgage application falling 8.5 percent from a previous 2.1 percent, and new homes sales dropping 11.2 percent from an expected 3.5 percent increase.
During yesterday's semi-annual testimony, Chairman Bernanke reiterated the need for benchmark rates to remain low for an extended period of time; however, he remained bullish towards the greenback, commenting that normalization in monetary policy will eventually support the US dollar. The quarterly GDP is scheduled to be released tomorrow and it is forecast to be unchanged at 5.7 percent.
The euro weakened further today as Greek's sovereign debt crisis continues. The euro fell to a one-year low against the Japanese yen on concerns that Greece may miss its debt payments without EU's assistance. The Greek government faced opposition from labor unions yesterday when protests broke out in central Athens to threaten government's decision to cut spending. Furthermore, Greek bonds declined as investors lost confidence in the government's ability to cut tight budget gap below the EU's 3 percent limit in 2012. Should the nation fail to fill much of its budget gaps this year, the euro may weaken further.
The British pound traded lower against majors as risk aversion rose today. The Sterling suffers as Britain battles record deficits and investors fearing a repeat of Greece's crisis. Business investment released today showed a drop of 5.8 percent in Q4 from the previous decline of 0.6 percent. GDP is scheduled for release tomorrow, forecast at 0.2 percent versus the previous 0.1 percent.
The Canadian dollar dropped 1.3 percent against the US dollar today as the market moved to low-yielding currencies for safety. As a commodity linked currency the Canadian dollar declined along with the price of crude oil and gold. The Q4 GDP is scheduled to be released on Monday, followed by Bank of Canada's rate decision on Tuesday.
The Japanese yen benefitted from risk aversion today, advancing against all major currencies. The yen appreciated to a one-year high against the euro and two-months high against the US dollar. As concerns of Greece's debt crisis continues, investors fled to the low-yielding yen for safety. At the beginning of today's Asian trading session, Tokyo CPI, industrial production, and retail trade are scheduled to be released.
The Australian and New Zealand dollars depreciated as markets remained risk averse due to concerns of Greece's continuing debt crisis. The currencies took a hit when Standard & Poor's suggested that they may lower Greece's credit rating by the end of March. Sovereign credit ratings in the Eurozone may lead RBA to keep its target lending rate unchanged next week.
10-Year Treasury Note Yield: 3.6405%
Dow Jones Industrial Average: 10196.54 -177.75