The greenback rose against the yen on Thursday as rebounding in global equity markets and better-than-expected U.S. data boosted optimism about the global economy and increased appetite for riskier assets. The U.S. dollar surged to as high as 101.58 versus the yen before easing in late New York session.
The signal currency surged to as high as 1.3338 versus the dollar and 133.53 against the yen in earlier trading, supported by a rise in regional share prices, however, euro retreated sharply later in the day after ECB President Jean-Claude Trichet said bank had some leeway to cut its main interest rate from its current record low of 1.25 percent. The euro/usd tumbled to as low as 1.3126 while eur/yen also fell to a session low of 131.90 before stabilising.
The Bank of England left the benchmark interest rate unchanged at 0.50 percent on Thursday and said it will keep buying government bonds to fight the deepest recession in a generation. Earlier in the day, reports from Britain showed that U.K. producer prices increased in March at the slowest annual pace in 20 months as the recession persisted and raw material costs dropped, eroding inflation pressures in the economy. The sterling fell to as low as 1.4586 versus the dollar and 0.9088 against the euro before rebounding, last trading at 1.4660 and 0.8970 in New York afternoon respectively.
Meanwhile, there were signs that the recession may be easing as reports from Japan showed that Japanese machinery orders unexpectedly rose for the first time in five months in February, posting a 1.4 percent gain versus –3.2 percent from previous month, while Labor Department in Washington reported later in the day that jobless claims fell by 20,000 to 654,000 in the week ended April 4, from a revised 674,000 a week earlier.
U.S. stock market jumped on Thursday after positive earnings news from Wells Fargo. The Dow Jones Industrial Average Index rose 246 points, or 3.14 percent to 8,083, while Standard & Poor’s 500 index and Nasdaq Composite index also gained 3.81 percent to 856 and 3.89 percent to 1,652 respectively.
On Friday, economic data releases include Japan BOJ monetary policy meeting minutes for March and U.S. Fed budget. Most of the major financial markets will be closed for ‘Good Friday’ public holiday.