The US dollar strengthened across the board after unemployment figures were released. Data from the Labor Department showed initial claims for state unemployment benefits dropped 29,000 to a seasonally adjusted 469,000 last week. Continuing claims fell to 4,500,000, from a revised amount of 4,634,000 previously. The Labor Department also reported non-far, productivity rose at a 6.9% annual rate rather than the 6.2% pace. Factory orders increased 1.7% in January, slightly less than forecast 1.8%.
The euro initially strengthened against the dollar after strong Greek bond sales, but succumbed to pressure after comments from European Central Bank President Jean-Claude Trichet. Trichet said the bank will keep the one-month liquidity operations and maintain the same rate, reinforcing the view that interest rates I the region will remain low in the foreseeable future. Market players viewed this as an extension rather than a withdrawal for a gradual exit strategy instead of an aggressive one. Euro zone gross domestic product grew 0.1% quarter-over-quarter, which was in line with expectations.
The British pound strengthened vs. the dollar overnight, but soon erased those gains after data from the US. There was little reaction from financial markets after the Bank of England kept interest rates and quantitative easing on hold.
The Japanese yen weakened after positive economic news from the US. Japan is set to raise its borrowing limit for foreign exchange intervention for the first time in six years, stirring talk the government may be signaling its willingness to intervene if needed to curb yen strength.
The Canadian dollar held steady against the dollar even as commodity prices fell. The Ivey Purchasing Managers index rose 51.9 in February, much less than forecast 56.0. Building permits fell 4.9% month-over-month in January, versus projections for an increase of 0.8%.
The Australian and New Zealand dollars both fell against the dollar as slow growth in the Euro zone increased risk aversion. The Reserve Bank of New Zealand is expected to keep interest rates steady at 2.50% when it meets March 11.
10-Year Treasury Note Yield: 3.6060%
Dow Jones Industrial Average: 10,413.76 +17.00