Technicals

The Dollar surged against the Yen on Thursday and erased earlier losses versus the Euro as Oil prices plunged and investors worried that high energy costs and financial market turmoil were slowing global growth. US stocks also rallied as Oil fell for a third straight day. That helped the Dollar post its biggest daily gain against the yen in more than three months. As well, better-than-expected Q2 results from JPMorgan Chase & Co helped eased concern about the stability of the US financial sector that has weighed on the Dollar. The Euro, which set a record above 1.6000 on Tuesday, at one point fell below 1.5800 for the first time this week as investors began focusing on the headwinds facing the euro zone economy.

Oil has gained 35% this year alone, at one point hitting a record high 147.27. It fell more than $5 on Thursday to 129.29, its lowest level in six weeks. UsdJpy last traded at 106.24, up 1.08%, its best daily performance since early June. It touched a session high of 107.09 earlier in the session. EurUsd rose only 0.18% at 1.5853 after falling to a session low of 1.5783. UsdChf rose 0.23% to 1.0200. GbpUsd went 0.11% lower at 1.9974.

Analysts said the Dollar's gains remained tentative, particularly given the state of uncertainty surrounding US financial markets and the slumping housing market. The US currency wobbled on Thursday when Kuwait's finance minister said it had no plans to buy more Fannie or Freddie debt and was looking to invest in Japan, China and India instead.

European Central Bank governing council member Nout Wellink also provided a Euro boost when he said slower Euro-zone growth would not necessarily reduce high inflation. Record high euro zone consumer price inflation prompted the ECB to hike rates to 4.25% this month.