The U.S. dollar rose across the board on Thursday as investors made bullish bets for a strong reading of the key U.S. payrolls data due out on Friday.
For the first time in months, investors were putting focus on U.S. data rather than the European debt crisis. Versus the Japanese yen, the greenback traded with a firm undertone throughout the day. Despite brief dip to 92.04 in Asian morning, the pair then edged up and eventually climbed to 92.81 in European afternoon before retreating briefly to 92.23.
The single currency maintained a firm undertone initially and rose to 1.2327 in European morning due to firmness in European stocks. Britain's FTSE 100, Germany's DAX and France's CAC-40 all closed up by more than 1% on Thursday. However, euro swiftly retreated from there and remained under immense selling pressure. Price penetrated 1.2175 and tumbled to 1.2152 in NY afternoon on broad-based strength in dollar together with speculation the European Central Bank would provide more liquidity to the financial system. Active cross-selling in euro also pressured price as eur/chf fell below 1.4110 and tumbled to as low as 1.4056.
The British pound edged up initially and reached an intra-day high of 1.4744 in European morning due to strength in European stocks. However, cable retreated from said high and remained under pressure in NY afternoon on broad-based strength in dollar. Cable eventually fell to 1.4586 in NY afternoon before stablizing.
In other news, Kansas City Federal Reserve Bank President Thomas Hoenig said Fed could raise to 1% by the end of summer as the economy would be strong enough to support such hike. Atlanta Fed President Dennis Lockhart also said the U.S. economy would be almost strong enough to allow the Federal Reserve to begin raising interest rates.
On economic front, eurozone retail sales data was weaker-than-expected and came in at -1.2% m/m and -1.5% y/y in April versus the economists' forecast of 0.1% m/m and -0.2% y/y with upwardly revised 0.5% m/m and 1.3% y/y rise in March. Eurozone services PMI rose to 56.2 in May, higher than the economists' forecast of 56.0, showing eurozone economy was still expanding despite recent growing alarm about the finances of eurozone states. U.K. Nationwide house prices rose by 0.5% in May, half of the rate of the previous 1.0% rise in April while the annual rate of increase was 9.8% in May. U.S. ISM non-manufacturing came in at 55.4 in May and was slightly lower than the forecast of 55.5 while U.K. services PMI in May came in at 55.4 versus the forecast of 55.5.
In other news, the group of 20 central banks would convene on Friday for the first time since the outbreak of European debt crisis.
Economic data to be released on Friday include: E.U. GDP, Canada unemployment rate, Ivey PMI, U.S. avg. hourly earnings, non-farm payrolls and unemployment rate.