Dollar Recoups Losses; Euro Pulls Back

The U.S. dollar was recouping some of its recent losses against most of the major and emerging market currencies. Softer-than-expected New Zealand gross domestic product, disappointing eurozone flash PMI, the renewed widening of interest rate spreads in Europe, and heavier tone in the equity markets, appears to have helped spark what appears to be largely corrective price action in the foreign exchange market, with the euro and dollar-bloc absorbing the bulk of the pressure.

The dollar was consolidating Wednesday's losses against the yen, but has shown little impetus to recover. It has been confined in a boring 15-tick range around JPY84.55. Sterling is also holding on to its recent gains better than the euro as it too benefits from the shakeout of some late euro longs. This euro pullback is likely to be seen as a better buying opportunity by New York traders.

Most major Asian equity markets were closed Thursday for a holiday, while those open were mixed. Asian mining stocks rose after an increase in base metals. In particular, the MSCI Asia Pacific Index was down 0.07% from a 0.62% gain the previous day. Stocks were mostly up in Taiwan led by an increase in consumer services and industrials. The present relative strength of Taiwan's economy has made it an attractive destination for equity investors.

In Europe, stocks in Germany fell as growth in Europe's services and manufacturing industries weakened more than expected. Stocks in Ireland and Sweden retreated the most in Europe, led by a sharp contraction in financials, industrials and oil & gas. Overall, the STXE 600 was down nearly 0.41% as concerns about the sovereign-debt crisis resurfaced.

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