The US dollar weakened vs. most major currencies

The US dollar weakened vs. most major currencies as speculation that the worst of the economic downturn may be over, prompted investors to buy higher-yielding assets. The DJIA broke 9,000 for the first time since January on positive earnings reports, as investors continued to push equities higher. The Labor Department showed that initial jobless claims increased 30,000 to 554,000 in the week, which was in line with expectations. Existing home sales rose 3.6% in June, which beat forecasts of a 1.5% rise.

The euro strengthened against the dollar as global equities continued to rise.
The European Central Bank reported that the Eurozone current account was down 1.2 billion euros in May, but up from -6.1 billion euros the previous month. The French business confidence production outlook improved slightly to 78.0 in July from a revised 76.0 the previous month.

The British pound was stronger against the dollar as positive data increased risk appetite. Domestic retail sales rose 2.9% in June from the previous year, beating forecasts of a 2.1% increase. Retail sales were much better than the previous month’s data, which were revised down to a decrease of 2.0% from a decrease of 1.6%. Mortgage loan approvals also rose from the previous month to 35,235 from 31,919.

The Japanese yen fell as an increase in risk appetite pushed investors out of the safe-haven currency. Japan’s exports declined 35.7% to its slowest pace this year, up from a 40.9% decline the previous month. Imports stayed relatively stable falling 41.9% from a year earlier, slightly above a 42.4% decline the previous month. The trade surplus widened to 508 billion yen.

The Canadian dollar traded near a six-week high against the dollar as investors wait for the Bank of Canada to release its report on monetary policy later today.
The loonie was up against the dollar despite a fall in crude oil prices, as investors sold the dollar amid increased risk appetite.

The Australian and New Zealand dollars both strengthened against the dollar as a rise in global equities encouraged investors to buy higher-yielding assets.
Data showing Japanese exports fell in June at the slowest pace this year as demand picked up worldwide also helped the currencies as they are large exporters of commodities.