Although euro rose in Asia to intra-day high of 1.3802 on active cross-inspired buying (eur/jpy rose to intra-day high at 124.16) due to expectations that European countries will come to the aid of debt-burdened Greece, the single currency retreated sharply from there in European trading as investors awaited more details on a rescue plan for debt-stricken Greece and were worried about repercussions for the rest of the euro zone.
Euro then picked up more downward momentum and tumbled to 1.3595 low (only 10 pips higher than last week's 1.3585 low) in NY mid-day after a European Union diplomat said eurozone countries have discussed all possible theoretical instruments for aid to debt-ridden Greece but made no concrete decision yet. However, the pair staged a strong rebound in U.S. afternoon on rally in U.S. equities rise as investors speculated European agreement to help Greece will help preserve the global economic recovery. DJI ended the day up 105 points to 10144.
The dollar declined from the Asian morning high of 90.15 against the Japanese yen to 89.57 low in European mid-day on cross unwinding in the yen (eur/jpy fell fm 124.16 to 122.05 & gbp/jpy fell from 140.92 to 139.65). The pair then rebounded to 89.89 in NY mid-day after the release of better-than-expected U.S. jobless claims data which came in at 440,000, compared to the economists' forecast of 465,000 and well below the upwardly revised previous reading of 483,000. The pair showed muted reaction to rally in the DJI and closed at 89.76.
The Australian dollar rallied from intra-day low of 0.8750 against the greenback in Asia as Australia's employment change came at 52.7K which was nearly 3 times higher than the forecast of 15.0K. The other commodity currencies displayed apparent strength due to strong Australian job data on Thursday as well. Unexpected slowdown in Chinese consumer inflation contributed to their strength as the news soothed some concerns about the need for quick monetary tightening by Chinese authorities. (aud/usd, nzd/usd and usd/cad ended the day up 1.76%, 1.26% and down 1.08% respectively.)
Economic data to be released on Friday include New Zealand retail sales, Japan consumer confidence, Germany GDP, EU GDP, industrial production, U.S. U. Michigan survey, retail sales and business inventory.