The Canadian dollar touched a four month high against the greenback

The US dollar gained ground against the yen touching a two-week high, but could not gain any momentum against the euro as an increase for risk appetite dominated the market. In other news April ISM manufacturing data rose to 40.1 increasing from the 36.3 reading seen in March, suggesting further traction in manufacturing.

Meanwhile on the back of Chrysler’s filing for bankruptcy, concerns increased over the fate of other U.S. automakers. Also look for overall market sentiment to remain susceptible to any news that may confirm that the swine flu is officially a pandemic. The market will turn its focus to next week's release of the results of U.S. bank stress tests for further direction into the overall health of the US financial system.

The euro gained ground against its US counterpart holding close to recent ranges with little data out of the Euro zone. The market will start to look towards next Thursday when the ECB will most likely announce a 25 basis point interest rate cut. Look for trading conditions to remain thin as most European markets remain closed for May Day.

Sterling strengthened against both its US and European counterparts on the heels of better than expected UK manufacturing data. The CIPS manufacturing purchasing managers' index improved to 42.9 in April from 39.5 in March. Look for the pound to remain range-bound ahead of a UK holiday on Monday, but the market will start to look towards the Bank of England’s first step of its quantitative easing program of 75 billion pounds next week.

The Japanese yen weakened against both its US and European counterparts after the jobless rate came in higher than expected at 4.8 percent with CPI data coming in at –0.3 percent. Look for the continued threat of deflation coupled with a renewed appetite for risk aversion to continue to pressure the USD/JPY currency pair as it pushes above 100.

The Canadian dollar touched a four month high against the greenback as interest in riskier assets coupled with an overall weaker USD sentiment dominated the market. Look for the loonie to remain on a strong footing ahead of next week’s all important PMI and employment numbers.

The Australian dollar rallied against its US and Japanese counterparts almost touching a seventh month high against the greenback as an increase for risk appetite dominated trading. The market will look towards the Reserve Bank of Australia’s policy meeting next Tuesday where rates should remain at 3 percent.

The New Zealand dollar was little changed against the U.S. and Australian dollars after the central bank cut interest rates yesterday to record lows. The market will look towards New Zealand’s first-quarter wages and jobs data next week.

The Mexican peso continued to remain under pressure under fears the deadly swine flu outbreak will further hurt the Mexican economy with President Felipe Calderon ordering non-essential government offices and businesses shut down for five days starting today.