Dollar strengthened the Japanese yen on Thursday as initial strong financial results from 3M & Co. and telecommunications company AT&T Inc. provided further evidence that second-quarter earning were more upbeat than originally expected. The greenback hit two-week high of 95.30 in New York trade before retreating. The Dow industrials index rose above the key 9,000 mark for the first time since January. In addition, Dallas Fed President Richard Fisher said that he did not expect a “V-shaped” or rapid recovery once the U.S. economy emerges from recession. He also stated that the Federal Reserve may or may not have to complete the announced asset purchasing schedules. DJI rallied and closed up 188.03 points or 2.12%, Nasdaq gained 47.22 points or 2.45% and S&P ended up 22.22 points or 2.33%
Earlier in New York trade, euro hit a seven-week high of 1.4292 against the greenback as rosy U.S. corporate earning fueled optimism about the economy and dented safe-haven demand for the U.S. dollar and the Japanese yen. The upbeat housing data also encouraged investors to buy in higher-yielding assets. The existing home sales data showed a 3.6% increase month-on-month compared to the market forecast of 1.5%. However, in late New York trade, euro tumbled to 1.4118 as a drop in U.S. stock index futures after the market closing triggered by a string of disappointing results from companies, including Amazon.com Inc. and Microsoft Corp, sparked caution and weighed on the single currency.
Earlier, U.K. retail sales rose by 1.2% in June, much higher than economists’ expectation of 0.4% while the annual rate was 2.9%, also above the consensus forecast of 2.2. The data gave a boost to sterling in early European session. Despite the pound brief retreat in New York morning, buying interest on dips lifted the price to an intra-day of 1.6587 after the better-than-expected housing data. However, sterling fell in tandem with euro against the dollar in late New York trade.
The Bank of Canada on Thursday said that Canada’s recession is ending amid rising commodities prices and consumer confidence. However, Bank of Canada Governor Mark Carney warned of a long, drawn-out healing process with continued job losses. He also added that a stronger Canadian currency against the greenback is “an important brake” on growth and the central bank stands ready to take further action to stimulate the economy, especially if a stronger dollar threatens to choke growth. Loonie strengthened to multi-week high at 1.0841 against the U.S. currency in New York morning before retreating partly due to profit taking.
Data to be released on Friday include German and eurozone service PMI and manufacturing PMI, German Ifo index, U.K. GDP, U.S. University of Michigan survey.