Falling oil prices spurred bullish sentiment for the US dollar, and led the currency to recover from losses earlier this week. As a result, the currency picked up its biggest gains against the low yielding Swiss franc and the Japanese yen. On the other side of the spectrum, the greenback continued to rack up losses against the commodity block, despite a drop in oil and on mild gains in gold, as the Canadian, Australian, and New Zealand dollars as rose. Against the European currencies, the British pound took the biggest bite out of the US dollar as hawkish commentary by BoE Governor Mervyn King suggested that the central bank is looking to increase the benchmark interest rate later this year. Finally, the euro trimmed gains against the greenback as it fell to 1.55.
Rising costs paired with fading demands continued to press on the manufacturing sector, and led the Philadelphia Fed Manufacturing index to fall for the seventh consecutive month to -17.1 from 15.6 in May.
Meanwhile, the leading indicators index unexpectedly increased 0.1 percent in May – helping to ease stagflation fears. Fresh unemployment data also added to the mix as initial jobless claims fell to 381K from 386K, while continuing claims dipped to 3060K from 3136k.
The stock markets picked up for the first time this week as oil retreated to $131/bbl. As a result, the DJIA rose 34.03 points to 12,063.09 points, with Boeing and AIG leading the winnings board. Among the broader indices, the S&P500 picked up 5.02 points to hold off at 1,342.83 points 452 stocks falling to a new 52 week low.
US Treasuries decline as the recovery in the stock markets curbed the appeal of risk-free bonds. As a result, the benchmark 10-Year yield rose to 4.209 percent from 4.138 percent, while the 2-Year yield surged to 2.937 percent from 2.853 percent.
Looking ahead, the US economic calendar remains bare for tomorrow, but may see increased volatility in the USD/CAD pair as Canadian retail sales is scheduled for release at 12:30 GMT.
