NEWS / Foreign Exchange

The U.S. dollar steadied against the yen

The U.S. dollar steadied against the yen after a report showed US producer prices rose by 1.3% boosted by higher energy costs.  In other news this morning, the Labor Department showed that initial jobless claims fell by a larger-than-expected 12,000 to 318,000 and the more consistent four-week moving average of first-time claims dropped by 10,250 to 329,250.    However, the data did little to change the outlook on the inflation picture as the market seems more focused on the move in equities and the volatility in yen.  Concern over a rising number of defaults in the U.S. sub prime mortgage lending sector, weaker consumer spending, and increased speculation for a rate cut by the U.S. Federal Reserve as early as August continues to subdue the greenback. 

The Japanese yen weakened further this morning against the US dollar due to stronger-than-expected US inflation data.  On the other hand, the Nikkei 225 Index rose 1.10% led by exporters, boosting the value of goods sold to the world??™s biggest economy. 

The euro fell slightly against the US dollar after US government data showed that net US capital flows turned positive in January with $74.4 billion of net inflows after a $14.6 net outflow in December.  Look for the euro to ascend in a gradual range as the overall sentiment still perceives a weaker US dollar.

Meanwhile, sterling slipped against the dollar as an increasingly risk averse market continues to trim exposure to high-yielding currencies.  Look continual pound weakness aligned with the yen due to the lack of major economic indicators in England this week.

The Canadian dollar was sidelined versus the greenback as weaker-than-expected manufacturing data from Canada and the US seemed to cancel each one another.  Oil prices steadied around $58 above three-week lows as OPEC agreed at its meeting in Vienna to make no change to its existing oil production levels.

The Mexican peso strengthened against the US dollar and Mexican stocks rose after copper prices surged to a three-month high boosting Grupo Mexico, a major copper producer and Cemex, a top supplier to the US construction industry.

Growth in New Zealand manufacturing activity slowed in February as the Kiwi remained strong as the Australian dollar stayed firm after regional equity markets rebounded and solid domestic jobs data provided support. 

Indicative Rates: