Dollar Extends Losses, New Zealand Dollar Nears 22 Yr High

Dark clouds continue to hang over the US dollar as bearish sentiment took hold of investors, and pushed the already weakened currency lower against most of the major currencies. In today’ session, the Yen picked up as falling stock prices provided confirmation that investors are reducing their net positions in carry trades, while the Pound Sterling and the Swiss Franc extended their gains as economic data for the countries remain bare till next week. The Euro pushed higher as the Purchasing Managers Index unexpectedly increased due to accelerated growth in the services sector, followed by the Australian and the New Zealand dollar as they advanced against the US dollar. The Canadian dollar was the only currency to buckle against the US dollar as Retail Sales rose less than expected, signaling that the economic slowdown in the US is taking a toll on Canada.

The lack of new economic data was not enough to keep the US dollar from falling as the Eurozone Purchasing Managers Index unexpectedly rose to 52.3, and lowered the willingness to hold US dollar. </span>
Increase volatility shook the securities market as an intraday reversal helped to lift investor sentiment late in the session. Share prices fluttered as they advanced during the morning session, but fell towards the afternoon and whipped back during the last hour of trading as CNBC announced a contingency plan to bail out bond insurer Ambac Financial to be disclosed next week. The DJIA picked up 96.72 points to leave the index at 12,381.02, with United Technologies soaking in the biggest gains, while tech giants Microsoft and Intel lead the losers. Among broader indices, the S&P500 rose 10.58 points to 1,353.11 led by CHC Helicopter Corp and Navigant Consulting, while Aventine Renewable Energy Holdings and Life Time Fitness Inc topped the losers.
US Treasuries prices were pushed lower amid the increase volatility in the securities market and continued to lose ground as rising inflationary pressures and a crumbling US dollar reduced the attractiveness of the risk free investment. The 10-Year yield pushed higher as it rose to 3.81 percent, while the 2-Year yield increased to 2.03 percent. New data on Existing Home sales will kick of the economic releases for next week, with the Producer Price Index and the GDP release due out later in the week.