The greenback moved sideways against major currencies as investors are focusing on the development of U.S. stimulus package. U.S. dollar rebounded from 89.70 to 90.76 and from 1.1521 to 1.1633 against the Japanese yen and Swiss franc respectively.
U.S. Treasury Secretary Timothy Geithner defended his strategy of taking time to work out the details of his plan to shore up the financial industry. U.S. lawmakers are cutting a proposed economic stimulus package to $789 billion and may be able to send it to President Barack Obama by the end of this week.
ECB Executive Board Member Jose Manuel Gonzalez-Paramo said that the current rate is not the lowest that policy makers can envisage. German Chancellor Angela Merkel said it was necessary to help banks rid themselves of risky assets but reiterated that there would be no overall 'bad bank' in Germany for them to dump all their toxic waste. The single currency rose initially from 1.2835 to 1.2998 before falling to 1.2833 in thin U.S. session, however, euro rebounded in late U.S. session to close at 1.2900 on news that the U.S. Senate and House of Representatives will be able to bridge their differences on stimulus plans together with the rebound in U.S. equities. Dow Jones industrial average index closed up 50.65 points at 7939.53.
The British pound fell from 1.4568 to 1.4315 on Thursday as the Bank of England issued a grim outlook for the economy in its quarterly inflation report together with Bank of England Governor Mervyn King said U.K. economy is in deep recession and recent sharp fall in sterling will help boost export demand. King also indicated that the slumping British economy may force policy makers to create money after cutting the target lending rate to a record low of 1%. The single currency rallied against sterling from 0.8862 to 0.9032.
Thursday will see the release of Japan’s domestic CGPI, eurozone industrial production, U.S. jobless claims, retail sales and business inventories.