Waning risk appetite helped boost the US dollar against most major currencies. Without much economic news due out today, many investors will likely take their cue from flows in equity and commodity markets. Global equity came under pressure today as investors took stock of recent hefty gains and oil prices slipped below $72 a barrel, helping to reprieve the downtrodden dollar.
Unemployment rose in 27 states in August, with California and Nevada reaching record levels of joblessness at 12.2% and 13.2% respectively. Many analysts are forecasting unemployment to reach 10% this year.
The euro's recent rally against the dollar stalled, but strengthened against the pound. The Eurozone's current account balance came in at a 6.6 billion euros surplus, and German producer prices increased by 0.5% month over month in August.
The British pound fell to a two-week low vs. the dollar, and hit a four-month low against the euro. With ongoing fragility of the UK banking sector, the pound came under pressure after news that the UK government was tightening the terms for one of the nation's banks to exit its asset-protection scheme. Lloyds Banking Group announced they were in talks over a possible reduction in the number of toxic assets it may place in the so-called asset protection scheme after yesterday's tougher-than-expected capital conditions set forth by the Financial Services Authority.
The Japanese yen remains fairly quiet ahead of the golden week holiday next Monday, Tuesday and Wednesday. After sparking a rally in the yen against the dollar earlier this week, Japanese Finance Minister Hirohisa Fujii backed away from the comments he made about favoring a strong yen.
The Canadian dollar is fairly steady against the US dollar after better than expected domestic wholesale trade data. Data from Statistics Canada reported Canadian wholesale trade soared by 2.8% in July, mainly due to higher sales in the automotive products sector. The second successive month-on-month rise is the latest sign that the worst of the recession has passed in Canada.
The Australian and New Zealand dollar shied away from one-year highs as prices in stocks and commodities weighed down the currency. The price of gold and oil hold steady, but lost some of their steam seen earlier this week as investors' risk-appetite weaned. Although the Aussie and the Kiwi have come off of their one-year highs, both currencies hold steady against the greenback busted by improved investor confidence in riskier assets.
10-Year Treasury Note Yield: 3.433%
Dow Jones Industrial Average: 9,825.11 + 41.19