The U.S. dollar rose against the Canadian dollar Tuesday morning and was trading at 1.3539 by 11 a.m.

A report released Tuesday morning showed that U.S. consumer confidence rose in April. This data is good news for the U.S. economy, which has shown noticeable growth in the recent past. Despite the economic expansion, inflation has remained at moderate levels. Federal Reserve Chairman Alan Greenspan recently reported that the Fed might hold off raising its key interest rate level until inflation starts to rise. Increased U.S. consumer confidence may lead to a boost in consumer spending and raise chances of a higher level of interest rates in the near future.

The euro appreciated against the Canadian dollar Tuesday morning and was trading at 1.6110 by 11 a.m. European Central Bank President Jean-Claude Trichet recently presented the annual report by the ECB. The report stated that despite mixed economic data, the Eurozone's economy is expected to continue to gradually improve. Trichet did not go into details about further interest rate decisions, but pointed out that the current level of interest rates is justified.

Many politicians, including German chancellor Gerhard Schroeder, do not share Trichet's opinion. While Trichet insists that the current key interest rate level is supportive of a gradual recovery in the Eurozone, the Eurozone's largest economy, Germany, continues to struggle. High unemployment and low consumer confidence in Germany prompted several leading economic institutes to lower their growth forecast for Germany. While German business confidence recently rose for the first time in three months, it will take more positive data to raise consumer confidence. German consumer confidence has remained at low levels for seven consecutive months.

Data for February showed a net capital inflow into the Eurozone, which supports Trichet's outlook. After January's net outflow, investors are now refilling their portfolios. The data is good news for the Eurozone, as it shows increased trust by investors that the economy is in fact on its way to recovery. Increased portfolio flows are also supportive of the euro, which, as a result of increased demand, is likely to appreciate against other major currencies.

Market Report given by Roman Muhlbauer, Commercial Trader, Accu-Rate Corp.

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