The dollar rallied versus the yen and found its sea legs versus the euro and sterling Thursday as traders took in a flurry of news on the corporate and economic fronts, including bankruptcy for one the US big three automakers.
Embattled Detroit institution Chrysler LLC will be filing for bankruptcy, President Barack Obama announced Thursday. Chrysler and Italian carmaker Fiat have formed a partnership, Obama said, which he believes has a strong chance of success.
The filing will mark the first time a major American automaker has declared bankruptcy.
Meanwhile, the news was rosier on the overall jobs situation, as fewer people filed for first-time unemployment benefits last week, continuing a recent trend of moderation that has marked the past several weeks.
While the number of people on the government's unemployment roll continues to set new record highs, the slowdown in layoffs is raising hope of stabilization in the labor market.
The U.S. Labor Department revealed that initial jobless claims came in at 631,000 for the week ended April 25th, down 14,000 from last week's revised total of 645,000.
The dollar surged versus the yen in early dealing, extending its strong gains from the previous session. The buck rose to a weekly high of 98.97, wiping out a string of losses in the process. With the advance, the dollar moved back toward a 3-month high of 101.43, set earlier in the week.
Overnight, the Bank of Japan retained its key interest rate at 0.1% and lowered its growth outlook. The bank now expects the economy to shrink 3.1% this fiscal and to grow 1.2% in the fiscal 2010. According to the forecasts made in January, decline in fiscal 2009 was seen at 2% and growth for 2010 at 1.5%.
The dollar managed to stabilize versus the euro on Thursday after falling to a new 2-week low overnight. The buck was on its was to another losing session, but turned around in early morning action, rising two cents to 1.3190.
Eurozone annual inflation stood at 0.6% in April, the same as in March, a flash estimate issued by the statistical office Eurostat showed Thursday. This was the lowest rate since the launch of euro ten years ago.
Eurozone's jobless rate stood at 8.9% in March, up from 8.7% in the previous month. The February jobless rate was revised from 8.5% reported initially. Economists were looking for a rate of 8.7%. A year ago, the jobless rate was 7.2%.
Versus the sterling, the dollar improved to 1.4810 after slipping to a nearly 2-week low of 1.4948 late last night. Also, the dollar hit a new 3-month low versus the resurgent loonie, dropping to 1.1900.
The Canadian economy contracted for a seventh straight month in February, led by slumping construction, according to data released Thursday morning from Statistics Canada.
Real gross domestic product edged down 0.1% in February. Economic activity has declined by 2.4% since October 2008.
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