The US dollar edged higher on the outcome of central bank meetings in Europe. Traders remain cautious ahead of Friday's U.S. jobs data. The Labor Department announced today that the number of laid-off workers seeking jobless benefits rose last week to 626,000, the highest since October 1982. Layoff news continued today. Cosmetics maker Estee lauder Cos, Botox maker Allergan Inc., Time Warner Inc.'s cable division, PNC Financial Services Group, airplane maker Hawker Beechcraft Corp., Liz Claiborne Inc., King Pharmaceuticals Inc. and aerospace company Rockwell Collins Inc. all announced layoffs this week.
The euro extended losses after European Central Bank left interest rates on hold at 2 percent even though German industrial orders tumbled by more than 15 percent in December, the fourth straight month. ECB President Jean-Claude Trichet warned that the euro zone is undergoing an extended downturn. A 50 basis point cut is expected at the March meeting. The euro was beaten down on Wednesday after Fitch Ratings downgraded Russia's sovereign rating.
British pound rallied after Bank of England cut borrowing costs by 50 basis points to a record low of 1 percent to kick off growth. With no hint of quantitative easing in the UK, and a surprise rise in UK house prices in January, the sterling gained sharply. Despite upbeat news, sentiment for the sterling remains sour on worries about Britain's financial sector. Investors are still concerned that BOE may need to do more than cut rates, like quantitative easing, to spur growth.
The Japanese yen is holding onto gains as risk appetite diminished on ongoing worries about slowing global growth and the delay in the passage of a U.S. fiscal stimulus plan. Risk aversion will continue to provide support to the yen even though Japan's economy was facing a hard landing and household consumption is expected to fall further.
The Australian dollar gave back recent gains as investors avoided riskier investments on worries of a deepening global recession. Fears of a long recession heightened after a recent report that showed huge job losses in the U.S. private sector, and a downgrade in Russia' currency rating adding worries of sovereign risk.
The New Zealand dollar strengthened after domestic employment data beat expectations, relieving expectations of any aggressive interest rate cuts. New Zealand's unemployment rate jumped to 4.6 percent in the fourth quarter, its highest in five years. However, 21,000 new part-time jobs were created. Any rally is expected to be short-lived on global recession worries.
The Canadian dollar is trading near $1.2300. The currency remains volatile as investors continue to shy away from riskier investments.
10-Year Treasury Note Yield: 2.87
Dow Jones Industrial Average: 7866.90 -89.76