The U.S. dollar continued its weekly decline falling against all of its major counterparts as signs global growth is being sustained boosted demand for higher-yielding assets. Stocks in Asia and Europe rose, pushing the U.S. dollar to its lowest level in 16 months versus the Euro. The greenback depreciated to the weakest levels in at least 40 years against the Swiss Franc and to the lowest level in 2 ½ years against the Swedish Krona. The Australian dollar climbed to new highs and is currently trading at its strongest level since the currency was freely floated in 1983. Producer prices in the oceanic country rose 1.2% in the first quarter, indicating further interest rate hikes may be necessary. Foreign Minister Kevin Rudd ruled out intervention in the Aussie, which has gained 16% this past year against the U.S. dollar. Meanwhile, jobless claims decreased by 13K to 403K last week, Labor Department figures showed today. Later this morning, a report is expected to show home prices in the U.S. fell 0.3% in February. In addition, leading indicators is expected to rise 0.3% after gaining 0.8% the month prior.
The Euro extended its rally versus the U.S. dollar, touching 16-month highs on widespread risk assumption. European stocks rose for a third day, after earnings from companies such as Akzo Nobel NV and Apple Inc. exceeded analysts estimates. The common currency stayed higher against the U.S. dollar even after a report showed business confidence in Germany fell for a second month in April after oil prices rose to the highest level in 2 ½ years. With U.S. equities poised for a higher open, expect the Euro to hold its gains during our trading session before Europe closes for the Easter Holiday. European banks will be closed for Good Friday and Easter Monday.
The Japanese yen remains under pressure against its higher-yielding counterparts as global equities continue to surge. However, the yen continued its rebound versus the U.S. dollar and has settled into pre-earthquake ranges. The Bank of Tokyo-Mitsubishi UFJ Ltd., has argued that the dollar may retrace its losses versus the yen and other currencies as investors judge that declines are going beyond what’s justified by the outlook for monetary policy and bond yield spreads.
The British pound surged to a fresh yearly high ahead of the holiday weekend as the economic docket reinforced an improved outlook for the U.K. Indeed, Britain’s budget deficit came in below economist estimates, buoying confidence in the U.K. economy and strengthening the case for higher interest rates. Public sector net borrowing increased 16.4 billion pounds in March amid projections for a 18.7 billion pound expansion. In addition, household spending in Britain increased 0.2% in March to exceed forecasts for a 0.4% decline.
