The US dollar strengthened vs. most major currencies as traders covered bearish bets against the dollar, sending the dollar higher. The dollar was also boosted by safe haven flows due to Iranian forces entered Iraqi territory on border disputes. Investors believe that the Federal Reserve will raise interest rates from record lows as positive economic data has renewed optimism in the US economic recovery.

The euro continued to weaken against the dollar as investors fear that some Euro Zone countries may struggle to pay off their debt. News that the Euro Zone trade surplus increased to EUR 6.3 billion in October, the largest in five years, failed to provide a boost to the economy. In Germany, Europe's largest economy, the Ifo institute's business climate index rose to 94.7 in December from 93.9. The Ifo institute's current assessment index rose to 90.5 from 89.1 and the institute's expectations index rose to 99.1 from 98.9.

Sterling fell against the dollar but was stronger against the euro as the Bank of England mortgage approvals climbed to its highest in a year in November. Mortgage approvals by the 6 biggest banks in the UK rose to 63,000 from 60,000. The British government had a GBP 20.3 billion budget deficit in November, better than forecast 23.0 billion deficit.

The Japanese yen weakened against the dollar as optimism about the US economy led investors to believe the Fed will raise rates sooner rather than later.

The Canadian dollar rose against the dollar as commodities including gold and crude oil advanced. Crude oil prices rose above 73 dollars per barrel as Iranian forces occupied an Iraqi oil field. Also helping the loonie was Research In Motion Ltd., one of Canada's largest corporations, which forecast sales and profit that exceeded analysts' estimates. Wholesale prices rose 0.3% month-over-month in October, better than the revised 0.1% previously.

The Australian and New Zealand dollars stayed steady against the dollar as investors saw the biggest weekly drop since February as a chance to buy.

Indicative rates:











USD/CHF        1.0454




10-Year Treasury Note Yield: 3.4989%

Dow Jones Industrial Average: 10,271.23 -37.03

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.