Daily Update March 05, 2010

The US dollar strengthened against most major currencies on signs that the US labor is gradually improving. The Labor Department reported US employers cut a smaller than expected 36,000 jobs in February, leaving the unemployment rate steady at 9.7%. This news bolstered views that the labor market was on the brink of creating jobs, and furthered the case for the Federal Reserve to begin lifting short term interest rates from near zero later this year.

The euro weakened after better than expected US February payroll data despite positive economic news from Germany. The Economy Ministry reported German manufacturing orders had their biggest jump since June 2007 in January, with overall orders rising 4.3% month-on-month pushed by demand from domestic customers.

The British pound lost its recent gains against the dollar following data US job losses was smaller than expected. The Office for National Statistics reported annual producer output price inflation accelerated to 4.1% in February, the highest rate since December 2008. The data suggested price pressures may ease in months to come.

The Japanese yen came under pressure after sources reported the Bank of Japan is likely to debate this month on whether to ease its ultra-loose monetary policy again as it remained under government pressure to help pull Japan out of deflation. Another policy easing could raise questions about the BOJ's independence after it buckled under government pressure in December.

The Canadian dollar regained its recent upward track vs. the US dollar after better than expected economic news from the US. The upbeat news offered more evidence of an economic recovery which built market confidence in moving away from the safe-haven greenback. Oil and gold prices also continued to rise, which also helped push the loonie higher.

The Australian and New Zealand dollars strengthened as investors' appetite for risk increased. The push in the Aussie and the kiwi come after better than expected US job payroll data and commodity prices holding on to its recent gains.

EUR/USD1.3648
USD/JPY90.12
GBP/USD1.5111
USD/CAD1.0240
USD/MXN12.6520
USD/CHF1.0728
AUD/USD0.9122
NZD/USD0.7013

10-Year Treasury Note Yield: 3.695%
Dow Jones Industrial Average: 10,534.08 + 89.94 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.