The US dollar strengthened against a basket of currencies overnight, but gave back its gains after mixed economic data. Data from the Commerce Department said retail sales unexpectedly rose 0.3% in February as consumers bought an array of goods from necessities to luxury items. The Commerce Department also reported January business inventories were unexpectedly flat. Inventories are a key component of gross domestic product changes over the business cycle. Preliminary March reading from the University of Michigan's Surveys of Consumers reported consumer sentiment declined slightly to 72.5, with the job outlook seemingly less positive.
The euro rose to near one month highs vs. the dollar after reports that Janet Yellen, a noted policy dove was a leading candidate for vice chair of the US Federal Reserve. San Francisco Federal Reserve Bank President Yellen is reported to be the top candidate to replace Donald Kohn who is retiring. European Union Statistics office Eurostat reported Eurozone industrial production jumped 1.7% in January.
The British pound continues to recoup recent losses against the dollar after an opinion poll suggested the Conservatives would win an outright majority in a general election expected in May.
The Japanese yen weakened on growing speculation the Bank of Japan would take further monetary easing measures next week. Prime Minister Yukio Hatayama and Finance Minister Naoto Kan added pressure on the central bank saying the government and the BOJ should work together to beat deflation.
The Canadian dollar strengthened to its highest level against the USD dollar since July 2008, after better than expected economic data. Statistics Canada reported unemployment rate fell to 8.2% in February with all gains coming from full-time jobs. The loonie rally is also due to oil and gold prices rising.'
The Australian and New Zealand dollars held steady as investors' appetite for risk increased. The Kiwi initially came under pressure after core retail sales only rose by 0.3% in January missing market expectations. Both the Aussie and the Kiwi rally can be attributed to commodity prices strengthening.
10-Year Treasury Note Yield: 3.722%
Dow Jones Industrial Average: 10,610.48 - 1.13