The greenback slipped against the single currency but rose against the yen on Wednesday, as risk appetite increased in general with strength in European and U.S. stocks, boosting demand for higher-yielding currencies.
The USD/JPY traded sideways in Asia. Traders said Japanese exporters have sold the euro and the dollar this week, repatriating some of their overseas earnings in the run-up to the fiscal year-end on March 31. However, the pair's weakness were limited by speculation that the Bank of Japan may take measure to ease monetary policy as it remains under pressure to pull the country out of a nagging deflation. The greenback broke out in European morning and rose on improved risk appetites due to firmness in global stock markets. The pair reached an intra-day high of 90.83 in NY morning before retreat due to long liquidation.
Euro traded with a soft undertone in Asia and fell to an intra-day low of 1.3544 in European morning on disappointing German trade data. German January trade surplus was recorded at 8.7 bln euros vs 16.6 bln in December, much worse than median forecast of 16.0 bln. The pair found support there though, as news came in saying Greece has told EU implementation of deficit plan is ahead of schedule. Price rose above Tuesday's high of 1.3636 and eventually hit an intra-day high of 1.3680 in NY mid-day before stabilizing.
The aussie rose to its highest in seven weeks after a report showed employers add jobs for six straight month. Positive jobs outlook together with supportive data from China which showed the country's export increased the most in three years lifted the currency in Asia and Europe. Aussie touched a 25-year high against the pound and the strongest since 1997 versus the euro in the Asian morning as central bank Assistant Governor Philip Lowe said growth will likely be at or above average the next couple of years. Aussie rose to an intra-day high of 0.9193 in NY mid-day before retreat on profit-taking.
RBNZ kept its cash rate unchanged at at record low of 2.5% and reiterated that a start to higher rates is likely around the middle of the year. Despite displaying apparent strength before the rate decision (rising to as high as 0.7100 in NY mid-day), price tumbled to 0.7010 after the announcement.
Economic data to be released on Thursday include New Zealand RBNZ rate decision, Japan GDP, Australia employment change, unemployment rate, Swiss SNB rate decision, US jobless claims, trade balance, Canada capacity utilisation, export, import, new house price index and trade balance.