(CEP News) - The U.S. dollar continues to set new long-term highs against the pound sterling, Canadian dollar and euro as repatriation and global economic worries dominate. Elsewhere, sentiment is mixed as the improvement in Libor stalled and a report suggested the U.S. government will enact another stimulus package.Three-month U.S. dollar Libor fell to 3.53% from 3.54% on Thursday after eight sessions of meaningful improvements. Market watchers aren't expecting additional improvement. "Libor fixings stabilized today suggesting that the recent government intervention to combat the credit crunch has reached an equilibrium at levels that continue to suggest significant dislocation," said T.J. Marta, fixed income strategist at RBC Capital Markets. Sentiment was somewhat bolstered by a Wall Street Journal article suggesting the U.S. administration will use up to $40 billion to limit foreclosures and stabilize the housing market. Toronto's S&P/TSX composite index is up 30 points to 9267, the Dow Jones industrial average is down 76 points to 8454, the S&P 500 is down 7 points to 889 and the Nasdaq is down 16 points to 1599. The U.S. dollar and yen continue to be safe haven plays at the expense of the pound sterling, euro and Canadian dollar. The Canadian dollar is down 0.0076 to 0.7899 against the U.S. dollar (1.2658 USD/CAD) and down 0.86 to 77.01 against the yen. The U.S. dollar is down 0.17 to 97.49 against the yen and the Dollar Index is up 0.397 to 85.767. The euro is down 0.0039 to 1.2817 against the U.S. dollar, up 0.0110 to 1.6230 against the Canadian dollar, up 0.0040 to 0.7944 against the pound sterling and is lower by 0.62 to 124.96 against the yen. The pound sterling is down 0.0128 to 1.6139 against the U.S. dollar and up 0.0029 to 2.0431 against the Canadian dollar. The fall in the loonie comes despite a rebound in crude prices. WTI crude oil is up $1.10 to $67.85. The front month gold contract at the Chicago Board of Trade is down $23.90 to $711.10 per ounce. U.S. two-year yields are up 6.5 bps to 1.56%, with five-year yields up 5.3 bps to 2.58%, 10-year yields down 2.1 bps to 3.57% and 30-year yields down 2.2 bps to 4.03%. The Eurodollar March 09 contract is down 7.0 ticks to 97.68. The yield curve is flatter, with the 10/2-year spread down 8.7 bps to 200.55 bps. Yields on two-year Canadian government bonds are flat at 2.10%, with five-year yields down 3.3 bps to 2.75%, 10-year yields down 2.8 bps to 3.58% and 30-year yields down 2.0 bps to 4.08%. The December 08 BAX contract is down 1.0 tick to 97.79. In Germany, returns on two-year German bonds are down 6.1 bps to 2.75%, with five-year yields down 4.5 bps to 3.33%, 10-year yields down 3.5 bps to 3.77% and 30-year yields down 11.5 bps to 4.26%. Yields on UK two-year bonds are up 6.7 bps to 3.25%, with five-year yields up 3.2 bps to 4.01%, 10-year yields down 1.6 bps to 4.47% and 30-year yields down 3.1 bps to 4.42%. All data taken at 9:38 a.m. EDT. By Adam Button, abutton@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca CEP Newswires - CEP News ? 2008. All Rights Reserved. www.economicnews.ca

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