Daily Foreign Exchange Market Summary

The US dollar rallied overnight but failed to maintain its overnight gains except on the yen.  The dollar fell 0.2% against a basket of currencies and failed to hold above the index' 55-day moving average.  Data from the Commerce Department reported wholesale inventories jumped 1.3% in July, the steepest gain since July 2008. 

The euro remains little changed as Euro zone bank woes and weaker than expected Italian industrial output capped any gains the euro has recently seen.  Data showed Italian industrial output rose by 0.1% in July, lower than the forecasted 0.5% increase.  The euro may come under pressure after comments from European Central Bank executive board member Lorenzo Bini Smaghi who warned of a looming debt crunch in several developed countries that could ultimately impede economies if left unchecked. 

The British pound fell below the 200-day moving average of $1.5400 but has not seen any major sell offs.  Data from the Office for National Statistics said producer price inflation input slowed 8.1% in August, well below forecasts of 8.9%. 

The Japanese yen weakened broadly against the dollar and the euro after news from Dubai World and China data helped whet risk appetite.  News that Dubai World reached a deal to restructure liabilities helped ease fears about Dubai's debt woes.  In China, imports leapt in August suggesting a promising domestic demand in an economy that has become a key driver of global growth. 

The Canadian dollar is little changed after losing ground against the US dollar overnight.  Statistics Canada reported employment rose by 35,800 jobs in August but the unemployment rate edged up to 8.1%.  Though Canada added more jobs than expected in August, the pace of employment creation slowed from the first half of the year suggesting the recovery was losing momentum. 

The Australian and New Zealand dollars continued to gain on the US dollar after positive economic data from China and commodity prices.  China's import increased 35.2% in August much better than the forecasted 26.1%.  Oil prices jumped to nearly $76 a barrel while gold prices held steady.  

Indications of Overnight rates:

10-Year Treasury Note Yield:  2.816%

Dow Jones Industrial Average:  10,456.56 + 41.32

This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.