The greenback lacked direction and moved independently against its major counterparts on Thursday as economic figures were mixed (ISM non-manufacturing index beat the forecast while jobless claims was slightly worse than forecast). Euro weakened as comments from ECB’s Trichet were kind of dovish and the single currency was pressured.
Euro traded sideways in Asia and rebounded to as high as 1.4350 on stronger-than-expected service PMI data (August figure came out at 49.9 versus forecast of 49.5). However, price retreated from there after ECB kept the target lending rate at 1 percent and president Trichet said the economic recovery will be bumpy and ECB officials were in no rush to withdraw emergency stimulus. The single currency fell to as low as 1.4236 versus U.S. dollar in New York afternoon.
Cable rose to as high as 1.6415 in European morning in part due to cross buying in sterling and the slightly better-than-expected U.K. services PMI (August figure was 54.1 versus 53.9 forecast) but price then retreated in tandem with euro on profit taking and also Trichet's comments. However, cross-buying on sterling gave support to the currency and price was relatively strong compared with euro (sterling strengthened to 0.8719 and 151.72 against euro and yen respectively).
On U.S. economic data, ISM index of non-manufacturing business, which made up almost 90 percent of the economy, rose to 48.4 last month, the highest level in 11 months, from 46.4 in July, while jobless claims increased for 570,000 last week, which was slightly worse than expected. The greenback showed little reaction on the data as the market focus was Trichet’s comments.
Economic data to be released on Wednesday include: Business capex in Japan; CPI in Switzerland; unemployment rate and employment change in Canada; non-farm payroll, unemployment rate and average hourly earnings in the States.