The dollar came under heavy pressure versus other major currencies after data from the Eurozone and a mixed bag of corporate earnings results fueled hopes that the global recession may be abating.
Indicating that the pace of slowdown is easing in Eurozone, the composite, manufacturing and services purchasing managers' indexes, or PMIs rose to six-month highs in April, reports showed Thursday citing data from the Markit Economics.
The flash manufacturing PMI for the euro area rose to a six-month high of 36.7 in April from 33.9 in March, exceeding the expectations for a reading of 34.7. Further, the flash services PMI improved to 43.1 from 40.9 in March, the highest since October. Hence, the composite index jumped to a six-month high of 40.5 in April from 38.3 in March.
This supports our expectation that the euro economy will contract at a slower rate in the spring than at the start of the year, Commerzbank analyst Christoph Weil said. Even so, the analyst said the pressure is still on the European Central Bank to cut rates again.
Economic news from the US also influenced traders. While the National Association of Realtors released a report Thursday morning showing that existing home sales fell by more than expected in the month of March, the trade group noted that first-time buyers are responding to low mortgage interest rates and tax credits.
The report showed that existing home sales fell 3.0 percent to an annual rate of 4.57 million units in March from a downwardly revised level of 4.71 million in February. With the monthly decrease, existing home sales were down 7.1 percent compared to the same month a year ago.
The dollar fell sharply against the euro Thursday, slipping to 1.3100 from an early level near 1.3000. With the loss, the dollar moved further away from a monthly high of 1.2887, set earlier this week.
Versus the sterling, the dollar dropped to 1.4690 from a 3-week high near 1.4400. The dollar also hit the skids versus its Canadian counterpart, with the bulk of its losses coming after the Bank of Canada announced in its Monetary Policy report that it would refrain from further quantitative easing for the time being.
The buck slipped to 1.2226 versus the loonie, moving back toward a multi-week low near 1.2000, set earlier this month.
Canadian retail sales edged up 0.2% in February to $33.7 billion, according to data released Thursday by Statistics Canada.
This comes after large declines in retail sales in November and December, followed by a partial recovery in January. February's slight increase was price-driven, as sales were down 0.3% in volume terms.
Against the yen, the dollar experienced choppy dealing, easing to 97.80 by mid-afternoon. Earlier in April, the dollar hit a 3-month high of 101.43, but has since drifted lower.
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