The greenback declined again versus the euro and Swiss franc on Thursday as the latest batch of U.S. economic data improved investors’ appetite for riskier assets and reduced the safe-haven appeal of the U.S. currency. Weekly jobless claims dropped surprisingly to 545,000 from a revised 557,000 figure while housing starts rose by 1.5% in August following a 0.2% fall in the previous month. In addition, the Philadelphia Fed survey increased to 14.0 in September from 4.2, well above the economists' expectation of 8.0.
Earlier in the day, the Bank of Japan kept interest rates unchanged at 0.10% as expected and upgraded its assessment of the economy. In its economic assessment report, the central bank said the decline in annual consumer prices would narrow in the latter half of the year to March 2010. Comments from BOJ Governor Shirakawa (who said forex rates should be set by the market in a stable manner) pushed usd/jpy down to 90.52 but pair rallied later to 91.64 on active cross selling in yen before price retreated in late U.S. session.
The Swiss franc weakened briefly to 1.0360 and 1.5235 against the dollar and euro respectively after the Swiss National Bank left interest rates at 0.25% and said it ‘will continue to act decisively to prevent any strengthening in the Swiss franc against the euro', however, usd/chf and eur/chf both fell sharply to 1.0287 and 1.5146 after the market digested the above comment and traders squared their early long positions for profit-taking.
Cable bounced to 1.6569 in European morning due to long liquidation in eur/gbp amid thin trading volume, however, price retreated fm there after U.K. retail sales data for the month of August turned out to be weaker than expected and met heavy selling in New York afternoon, fell to as low as 1.6426 before recovery.
Economic data to be released on Friday include:
PPI in Germany; current account in Eurozone; PSNCR in U.K. and; wholesale sales in Canada.