Overall: The dollar closed Thursday’s trade mixed as economic data and news from almost every region had an enormous influence on the greenback. The European Central Bank, The Bank of England and the Bank of Canada all released interest rate decisions and all kept rates on hold, as expected. Comments from ECB President Trichet, during the press conference, moved the euro higher, while political comments from the U.K.’s Prime Minister, Gordon Brown, led the pound lower against the dollar. The greenback strengthened against the pound and Japanese yen, weakened against the euro, Canadian dollar and Swiss franc and closed flat against the Australian dollar.

Initial U.S. unemployment claims dropped slightly last week that has some economists’ speculating that the worst part of the employment decline is over. Attention now turns to tomorrow morning’s release of non-farm payrolls, which, based on today’s jobless claims, have traders betting the number will be better than expected. Initial unemployment claims came in at 621K, slightly higher than the 620K expected and slightly better than last week’s 625K read. Worker productivity, a measure of output per hour came in at 1.6%, more than the expected 1.2% and the prior read of 0.8%.  

The Euro (Eur/Usd) The euro endured a volatile day of trade and closed 40 pips higher after trading in a range of 170 pips. The ECB kept interest rates on hold this morning, but comments from ECB President Trichet who said he sees signs that the worst of the recession is over, led to a strengthening of the euro. Trichet also said the region’s economic performance will improve this year. The pair closed the day near 1.4180.
The Pound (Gbp/Usd) The pound weakened against the dollar for a second day as speculation swirled during this morning’s European session that Prime Minister Gordon Brown was ready to resign. However, those rumors were described as “nonsense” but the ruling Labour party is clearly in trouble. The Bank of England decided to keep interest rates on hold this morning, as expected, at 0.5% and said it will not be increasing gilt purchases beyond the 125 billion pounds. Cable traded in a wide 350 pip range and closed lower by approximately 100 pips.

The Aussie (Aud/Usd) After trading in a wide 200 pip range on Thursday, the aussie closed the day flat, less than 10 pips below where it started last night’s Asian session. U.S. equity markets closed higher as did gold, which added approximately $15 an ounce and the Australian dollar gained throughout the U.S. session erasing losses sustained during the European session. The pair closed the day near the 0.8025 level.

The Cad (Usd/Cad) The Bank of Canada decided to leave interest rates unchanged this morning at 0.25%, as expected. The Canadian dollar strengthened after the central bank said financial conditions have improved significantly and oil prices erased Wednesday’s decline, moving above $69 a barrel, before weakening slightly and closing just below that level. The Ivey PMI release came in below the 50 benchmark, at 48.4, lower than the expected 54.3 and the previous read of 53.7. The cad dropped 140 pips and closed the day near 1.0960.

The Swissy (Usd/Chf) The swissy also traded in a wide range, 120 pips, breaking above Wednesday’s high before declining, and closed the day 20 pips lower. The pair is trading just below the 1.0700 level. There were no Swiss economic releases this morning but CPI data will be released tomorrow morning. Also, Board Member Hildebrand will be speaking in the morning and his recent speeches have created a certain amount of volatility when he talks about intervening in the currency market.

The Yen (Usd/Jpy) The yen moved higher on Thursday, gaining 70 pips on the day and tested the 100 day simple moving average but was unable to break above the resistance level. U.S. equity markets closed higher, weakening the Japanese currency as traders sold the Japanese yen in favor of higher yielding securities. The pair closed the day near 96.65, the highest close this week.