NEWS / Foreign Exchange

dollar is little changed versus most major currencies

Yesterday's jitters in financial markets, which were induced by expectations of tighter monetary policy in China and Japan, proved to be short lived. The decent performance on Wall Street yesterday (major indices were essentially unchanged on the day) helped to stabilize Asian equity markets. Indeed, the Nikkei index rose 0.5% last night, and the Chinese stock market recouped essentially all of its losses from the previous day. European bourses are up 1% or so as of this writing.

Trading in currency markets has been rather quiet, and the dollar is little changed versus most major currencies. The major exception to that statement is the Japanese yen, which has weakened across the board. It appears that the unwinding of yen carry trades also was short lived. This morning's releases of retail sales data in Europe show that consumers are alive and well. French consumer spending was up 0.7% in March, which lifted the year-over-year growth rate to 6.3%. Across the Channel, the volume of British retail sale rose 0.3% last month, placing the year-over-year growth rate at 4.8%. Although the news had little effect on the euro or the British pound, the strong data underscore the need for further monetary tightening by the ECB and the Bank of England.

There are no major U.S. data releases on the docket this morning, so trading in currency markets should generally remain relatively quiet. The Canadian dollar could be affected by the release of Canadian retail sales data at 8:30 EDT. However, after a week when the British pound hit a 25-year high against the dollar and the euro flirted with its all-time high vis-? -vis the greenback, most market participants are probably ready for a breather.