The US dollar consolidated yesterday’s loss as oil prices retreated, but continued to rack up losses against the British Pound as fresh UK data supported the bullish run. As a result, the US dollar gained the most against the low yielding Swiss franc and Yen, and was followed by the Euro as the currency fell toward 1.5700. Against the commodity currencies, the greenback rallied against the Canadian and Australian dollar as commodity prices dipped lower, but continued to trail against the New Zealand dollar as Finance Minister Michael Cullen lowered taxes in order to restore confidence in the high yielding currency.
Oil prices retreated today as market participants argued that the surge to $135 a barrel was overpriced, and pushed the blame on day-traders who rushed to cover short-futures position amid a fall in inventories. On the economic front, fresh data boded well for the US dollar as Initial Jobless Claims unexpected declined to 365K from 371K, while Continuing Claims held steady at 3073K. The House Price Index release also added to the mix as it fell less than expected to -0.2 percent from 0.1 percent on a yearly basis, while it fell to -0.4 percent from 0.4 percent on a monthly basis.
Improving data paired with falling oil prices helped to restore confidence in the stock markets, and led the market to recover from a two-day losing streak. As a result, the DJIA rose 24.43 points to 12,625.62 points, with IBM and Coca Cola leading the winnings board. Among the broader indices, the S&P500 picked up 3.64 points to hold off at 1,394.35 points, amid 139 stocks falling to a fresh 52 week low.
The recovery in the stock markets swayed demands for US Treasuries, and pushed investors to leave the safe haven of risk free bonds in search of higher returns. As a result, the benchmark 10-Year yield rose to 3.911 percent from 3.809 percent, while the 2-Year yield surged to 2.528 percent from 2.402 percent.
Looking ahead, Manufacturing and Services PMI data for the Euro-Zone will kick off the morning at 7:00 GMT, and will be followed by the 1st Quarter Preliminary GDP reading for the UK at 8:30 GMT. The Existing Home Sales index will be the only event risk scheduled for the US dollar, and will bring an end to the slew of market moving data at 14:00 GMT.