The US dollar strengthened after disappointing US retail sales data and caution ahead of a string of corporate earnings boosted safe-haven flows into the US dollar. The greenback, however, fell for a third day against the yen, the longest stretch of decline in two months as US retail sales decreased 1.1 percent last month after a revised 0.3 percent advance in February. The disappointing indicator further fueled worries about a shaky global economy and helped reverse some of the recent positive sentiment in markets.
The euro fell against the US dollar and the yen as investors ignored rises in European equity markets and are staying cautious ahead of a string of upcoming US corporate earnings. Wariness among investors is stoking some demand for the perceived safety of the greenback as well as the yen, while it pressures the euro and other currencies seen as higher risk. The single currency also fell on technical factors after failing to extend gains on Monday that took it close to $1.34 against the dollar, its highest level in nearly a week, after better-than-expected Goldman Sachs results fanned optimism about the outlook for financial firms.
Sterling rose broadly against the euro and US dollar as the pound continues to enjoy news of strong first-quarter earnings from Goldman Sachs on Monday.
This helped boost global banking shares given the UK economy's heavy dependence on the banking sector. The pound was also supported by higher regional share prices before more US firms report earnings this week.
Speculation is on the rise that better-than-expected results among US banks may boost optimism for improved performance among UK financial institutions, which may boost stock markets and sterling, at least in the near term.
The Japanese yen continued to gain against the US dollar and most major currencies. As US stocks fell, this prompted investors to shun riskier assets and seek safety in the Japanese currency.
The Canadian dollar rose to its highest level in over two months versus the US dollar, supported by a combination of firmer oil prices and a rally in overseas equity markets. The loonie has continued to strengthen based on higher gold prices, oil is higher and most base metals are also higher. All of that is playing into the Canadian dollar's favor and should continue to help boost the currency.
The Australian dollar declined, ending a three-day gain, as speculation increases that its’ recent rally to a six-month high was excessive. The New Zealand dollar also suffered from a correction as US stock futures dropped, damping investor demand for higher-yielding assets. Despite the recent correction, there is still enthusiasm about the Australian dollar after gains in international equities and commodities, bolstered by China’s cyclical recovery.
Australia’s economic health relative to other major nations is also supportive for the Aussie.
