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USD
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The U.S. dollar pushed higher against the majority of its rivals as European equities fell and U.S. equity futures show the Dow Industrial Average will pull back from recent highs on the open. The DJIA rose to 13,000 yesterday, the highest level since May of 2008. This morning’s economic docket showed that mortgage applications in the U.S. fell for the second week, led by decline in refinancing. The index decreased 4.5%, according to the Mortgage Banker’s Association. The data has not affected the U.S. dollar in early trading. The Dollar Index rose before a report that is expected to show existing home sales in the U.S. increased. Indeed, sales of previously owned homes is forecast to rise 1.1% in January, after gaining 5.0% in December.
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EUR
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The Euro remained largely unchanged versus the dollar as PMI was reported to be worse than expected. Euro-zone PMI composite, composed of manufacturing and services PMI dipped below the tipping point of 50.0 at 49.7, signaling contraction in February. French and German PMI showed growth, however they were unable to offset the anchoring PIIGS poor economic data. Despite the recent upswing surrounding the Greek bailout, risk remains present as strict austerity measures threaten to strangle economic growth across the euro-zone.
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GBP
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The British pound weakened against the dollar after the Bank of England released the minutes from the February 9th policy meeting. The results showed a growing divide amongst its board members. Of the nine voting members, only Adam Posen and David Miles voted to raise the BOE quantitative easing program by 75B pounds. The remaining seven members voted to raise QE 50B pounds. This lack of monetary policy unanimity raises concern about the direction of the U.K. economy. Fourth quarter GDP will be released on Friday, expected to be unchanged at –0.3%.
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JPY
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The Japanese yen fell to a 7-month low against the U.S. dollar as increasingly positive U.S. data has softened demand for the nation’s currency. The yen has come under pressure as the extra yield offered by two-year Treasuries over similar-maturity Japanese bonds increased to a six month high. The yen has depreciated 6.6% in the past three months, the biggest decline among 10 developed nations peers tracked by Bloomberg Correlation Weighted Indexes. The yen was the best performing currency in 2011.
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OTHER
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The Norwegian Krone jumped as a strong labor market report fueled speculation the central bank may refrain from cutting interest rates. |
