The US dollar strengthened as hawkish comments from Federal Reserve Bank of Dallas President Richard Fisher spurred speculation that the Fed may consider rate hikes in the near future, helping the greenback to advance against all of the major currencies, except for the Canadian dollar, as oil prices eased. The New Zealand dollar took the biggest plunge against the US dollar, and was followed by Australian dollar as the pair traded near 0.9550. On the other side of the spectrum, the Swiss franc and Japanese yen continued to tally up losses against the greenback, while the Euro and British pound fell to trade near 1.5500 and 1.9750, respectively.
A speech by Federal Reserve Bank of Dallas President Richard Fisher spurred bets that the Fed may raise the benchmark interest rates earlier than expected as he highlighted upside inflationary risks to be a major concern for the central bank. Furthermore, he said he expected the FOMC to change course if “inflation expectations continue to worsen.” On the economic front, US Q1 GDP was revised higher to 0.9 percent from 0.6 percent, with falling import demands helping to narrow the trade deficit. The headline reading for Personal Consumption remained unchanged at 1.0 percent, while the Core Personal Consumption Expenditure index edged lower to 2.1 percent from 2.2 percent. Amid the minor improvement in growth figures, the labor market continued to deteriorate as Initial Jobless Claims rose to 372K from 368K, while Continuing Claims rose to a four year high of 3104K.
The stock markets continued to rack up gains as oil fell below $127 per barrel, with MasterCard adding to the mix as they increased future growth forecasts. As a result, the DJIA rose 52.19 points to 12,646.22 points, with 22 of the 30 components advancing. Among the broader indices, the S&P500 picked up 7.42 points to hold off at 1,398.26 points, with 138 stocks rising to a new 52 week high.
US Treasury prices continued to face downside pressures as the stock markets advanced throughout the week, and swayed demands for risk free bonds. As a result, the benchmark 10-Year yield rose to 4.083 percent from 4.021 percent, while the 2-Year yield surged to 2.686 percent from 2.632 percent.
Looking ahead, at 12:30 GMT, the Canadian GDP and the US Personal Spending and Income index will highlight the major event risks for the US session, and will be followed by the Chicago Purchasing Manager Index at 13:45 GMT. The U. of Michigan Confidence and NAPM Milwaukee index will the last bit of data scheduled for the week, with the indices bring the eventful week to a close at 14:00 GMT.