The greenback rebounded euro. Japanese yen and Swiss franc on profit-taking as crude oil prices retreated strongly from fresh record high of 135.09 to 130.08 and traders added bets that the Federal Reserve will raise interest rates by year-end.
Interest-rate futures showed a 92% chance the Fed will keep its target rate for overnight lending between banks at 2% on June 25, up from odds of 88% on Wednesday. Traders also see a 34% probability the Fed will lift the rate in September to 2.25%.
The single currency retreated from 1.5814 to 1.5693 against the U.S. dollar on profit-taking together with the release of weaker-than-expected eurozone industrial orders. The greenback rallied from 102.73 to 104.38 versus the Japanese yen as on speculation that surging oil prices will hurt Japan's economy, a net importer of energy.
However, the British pound rallied from 1.9683 to 1.9850 on active cross buying in sterling as U.K. retail sales declined by 0.2%, better than the expectation of a decrease of 0.5%. Euro tumbled against sterling from 0.8013 to 0.7926 while sterling rallied versus Japanese yen from 202.76 to 206.52.
The New Zealand dollar rose against U.S. currency from 0.7760 to 0.7890 after Finance Minister Michael Cullen cut taxes, easing pressure on the central bank to lower interest rates to support the economy. However, Australian dollar retreated strongly from the multi-year high of 0.9655 made on Wednesday to 0.9544 due to dollar’s rebound across the board and the strong retreat in crude oil prices.
Friday will see the release of BOJ minutes, German and eurozone PMI manufacturing and service data, U.K. GDP and U.S. existing home sales.