The US Dollar consolidated last week’s loss as it advanced against most of the major currencies, but failed to hold up against the Canadian dollar as raging oil prices surged above $127 a barrel. Amid record high oil prices, the New Zealand and Australian dollar slid against the greenback due to fading growth prospects, and was followed by the European currencies as the Pound and Euro edged lower to trade in the 1.94 and 1.55 range, respectively. A rise in carry trades spurred bearish sentiment for the low yielding Yen and Swiss franc, with the Swiss franc taking the biggest plunge against the US dollar as the pair traded at 1.053.
The stock markets started the week strong as fresh economic data soothed recessionary fears, and spurred bullish sentiment as investors became increasingly optimistic towards the US economy. As a result, the DJIA rose 41.36 points to 13,028.16 points, with Boeing and Chevron racking up the biggest gains. The broader S&P500 picked up 1.28 points to hold off at 1,426.63 points, with 316 stocks advancing to a new 52 week high.
Rising stock prices curbed demand for US Treasures, and pushed investors to raise their risk appetite. As a result, the benchmark 10-Year yield fell to 3.835 percent from 3.846 percent, while the 2-Year yield plunged to 2.402 percent from 2.443 percent.
Looking ahead, the Producer Price index will kick off the morning at 12:30 GMT, and will be the main event risk for tomorrow. The yearly figure headline figure for the Producer Price Index is expected to inch lower to 6.6 percent from 6.9 percent, while we forecast the core index to edge higher to 2.9 percent from 2.7 percent.