The greenback declined broadly on Wednesday after minutes from the U.S. Federal Reserves latest policy meeting suggested the possibility of more stimulus measures for the economy. The dollar index down 0.55 percent at 77.45. In the minutes, Fed members expressed concerns that the winding down of the central bank's massive purchases of mortgage securities could hold back a fragile housing market recovery. In addition, Fed officials expected unemployment to remain high for 'quite some time'.
Although the single currency nose-dived to 1.4282 at European opening after comments from ECB's Stark who said EU would not save Greece and indicated euro-zone economic situation has improved but outlook still uncertain, euro quickly staged a strong rebound from there. The rally later picked up more momentum in New York session from solid U.S. data and then the dovish FOMC minutes and price hit intra-day high of 1.4435 late in NY afternoon before stabilizing.
U.S. ADP National Employment report showed private employers shed 84,000 jobs in December (forecast was 73,000 jobs decrease), fewer than the revised 145,000 jobs lost in November.
Although sterling enjoyed a 'joy ride' to a high of 1.6065 in European morning due to some cross-buying of sterling, good selling interest there checked intra-day gain and short term speculators sold the pound as UK Services PMI failed to make any bullish excitement. Cable later tumbled to 1.5938 in NY morning before rebounding in tandem with euro on dovish FOMC minutes in NY afternoon.
U.K. services PMI rose to 56.8 in December from 56.6 in November. The modest rise in activity was slightly better than expectation which was tipped to remain at 56.6.
Versus the yen, dollar displayed apparent strength in both Asia and Europe. The pair eventually rose to intra-day high of 92.75 on renewed cross selling in jpy after the release of U.S. ISM non-manufacturing business activity index which came in at 53.7 in December compared to the expectation of 50.5 and the reading of 49.6 in November. U.S. ISM non-manufacturing PMI was 50.1, less than economists' forecast of 50.5, but well above previous reading of 48.7 in November.
Data to be released on Thursday include New Zealand trade balance, Australia trade balance, retail sales, Swiss CPI, EU retail sales, Germany industrial production, U.K. BOE rate decision, U.S. jobless claims , Canada Ivey PMI.