US$ Falls to 2-Month Low Versus Euro

USD  ¯	The U.S. dollar fell across the board, including to a 2-month low versus the Euro, as strong economic data released abroad dampened demand for the greenback as a safe-haven.  The greenback remains under pressure versus the commodity-backed currencies as the price of oil continues to creep higher as tensions in the Middle East mount. This morning’s economic docket showed that number of Americans filing first-time jobless claims last week held at a four-year low, more evidence the labor market is improving.  Later this morning, the house price index is expected to show that prices on a month over month basis climbed 0.1% in December, down from 1.0% in the month prior.  The data is likely to reinforce the view that the housing market continues to drag on the overall health of the U.S. economy.
EUR  ­	The Euro strengthened to a new two-month high versus the dollar as German consumer confidence beat estimates. The IFO business climate in Germany rose to the highest level since July, at 109.6. The European Commission is forecasting the European economy to shrink in 2012. The forecast is also calling for inflation above the 2.0% threshold, at 2.1%. Strict austerity measures across southern Europe are expected to slow business growth and raise unemployment; further proving the recovery will be an arduous road.
GBP  ­	The British pound rose against the dollar and fell to a 10-week low against the euro, as the business climate in Germany proved better than expected. U.K. CBI trends total orders, a measure of manufacturing output rose to a six-month high in February to –3, up from –16 in January. This number helped the sterling pare yesterday’s losses against the dollar following the release of the BOE minutes. Tomorrow, a report is expected to show the U.K. economy contracted in the fourth quarter.
JPY  ­	The Japanese yen gained modestly versus the U.S. dollar as traders sold the currency to take profit as the pair reached recent highs.  Indeed, the Japanese yen remains close to a 7-month low versus its American counterpart.