The US dollar is mixed this morning against a basket of currencies after the Fed's decision to keep monetary policies loose for the time being. Many analysts are expecting a bias towards more dollar weakness in the medium term. Data from the Labor Department showed an unforeseen 21,000 drop in jobless benefits claims and initial data for state unemployment insurance declined to a seasonally adjusted 530,000 last week. Data also showed sales of previously owned homes unexpectedly fell in August to 5.10 million units, denting the positive sentiment that the housing market was recovering from a three-year slump. As the G20 summit begins today and ends tomorrow, watch the dollar to remain under pressure.
The euro strengthened against the pound but weakened vs. the dollar. Data from the Institute for Economic Research in Germany showed that business sentiment rose to 91.3 from 90.5 in August, but fell short of expectations.
The British pound fell vs. the dollar and euro after comments from Bank of England Governor Mervyn King. King commented that the weaker pound was helping to cushion the UK's down-turning economy and will help reorient the UK economy toward exports. He also cautioned that the UK economy may be picking up, but people should not get too carried away as the growth was small. His cautious tone echoed minutes from the BoE's policy meeting earlier this month.
The Japanese yen pushed higher against the dollar overnight as the Japanese market opened after a three day holiday, but erased those gains as investors' appetite for risk waned.
The Canadian dollar lost some steam as cautious investor's eye volatile equity markets, oil prices and the G20 summit. Oil fell below $68 a barrel continuing the previous session's decline.
The Australian and New Zealand dollars remain steady vs. the US dollar but erased some of the overnight highs as risk-aversion was brought back to the forefront of many investors. Many market players are forecasting the Reserve Bank of New Zealand to raise rates after a string of positive economic data last week.
10-Year Treasury Note Yield: 3.391%
Dow Jones Industrial Average: 9,700.94 - 47.61