The greenback was mixed on the Thursday session, initially sharply lower against the euro before recovering by afternoon trading. US equities turned negative as the Dow Jones and S&P 500 both slumped by nearly 1.5% and the Nasdaq tumbled by nearly 2.7%. Data released earlier today saw weekly jobless claims ease to 623.5k, down from 637.25k while Q1 preliminary labor costs declined to 3.3% from 5.7% and productivity reverse the previous month's 0.4% decline to increase by 0.8%.
Traders will focus closely on Friday's April jobs data with unemployment rate seen jumping to 8.9%, its highest since 1983 and non-farm payrolls posting a loss of 600k jobs versus a loss of 663k jobs previously.
Euro Rallies on ECB Move
The euro bounced off its session lows against the dollar and the yen following ECB President Trichet's post-decision press conference. The European Central Bank, as expected, cut its benchmark lending rate by 25-basis points to 1.0%. Trichet announced that the Bank would purchase nearly 60 billion euros in covered bonds and provide unlimited funds to banks for up to one year. He stressed that the covered bond purchase would not result in quantitative easing, but the idea is to revive a market which has been very heavily touched, and all that goes with the survival of the market including spreads, liquidity, and the depth of the market. Trichet explained that, these decisions have been taken to promote the ongoing decline in money market term rates, to encourage banks to maintain and expand their lending to clients, to help improve market liquidity in important segments of the private debt security market and to ease funding conditions for banks and enterprises.
EURUSD advanced toward its 200-day moving average near the 1.3470-level before relinquishing some of its strength. The pair hovers just beneath the 1.34-level with support seen at 1.3370 followed by 1.3340 and 1.33. Subsequent floors will emerge at 1.3260, backed by 1.3230 and 1.32. Gains will target interim ceilings at 1.34, followed by 1.3440 and 1.3470. Additional resistance is eyed at 1.35 and 1.3550.