The dollar posted gains against its major counterparts in early afternoon trading Thursday in New York. After an influx of economic data earlier, traders hedged their bets by moving into the safety of the dollar ahead of markets closing for the week.
As traders took shelter in the world's safe haven currency before the long weekend, the buck rallied against the euro, posting a weekly high. The greenback also moved up against the sterling, challenging a weekly high, while the Bank of England announced no change to its key interest rate. Meanwhile, the buck drifted higher against the yen as the Japanese currency remained under pressure with a third stimulus package passed for the export giant.
The dollar surged against the euro in the late morning hours and moved past yesterday's weekly high, driven by a late morning rally. In the early afternoon hours, the buck is sitting at 1.3132, up a penny from its overnight levels. With the move, the greenback is challenging another high of 1.3121 posted early last week, and in passing the mark it would set its highest level since mid-March.
The European Central Bank said in its monthly bulletin that the world economy, including the euro area, is undergoing a severe downturn. The April bulletin was identical to the introductory statement given by the ECB President Jean-Claude Trichet on April 2, after announcing the Governing Council decision.
The MPC also decided to continue with the GBP 75 billion-asset purchases program, utilizing the central bank reserves in order to boost lending. The central bank said it would take another two months to complete the asset purchase program. Since its previous meeting, a total of just over GBP 26 billion of asset purchases had been made, the MPC said.
Meanwhile, the buck also showed strength versus the sterling, looking to challenge its weekly high of 1.4583 posted Tuesday. The pound recorded a level of 1.4609 in the early afternoon, below its overnight quote of 1.4683.
At the end of two-day rate setting meeting on Thursday, the Bank of England decided to hold the interest rate at 0.5 percent. The interest rate now stands at the lowest level since the central bank was established in 1694. The BoE maintained the rate after slashing it for six straight months from 5 percent in September.
Moving into the early afternoon hours, the buck reclaimed the 100 yen mark posting a level of 100.56, after recording an overnight quote of 99.85. Last week's move past the benchmark brought the dollar to its highest level against the yen since early November, with the currency posting a level of 101.44.
Japan's ruling Liberal Democratic Party has approved fresh stimulus spending of JPY 15.4 trillion (USD 154 billion) to resuscitate the world's second-biggest economy from its deepest recession since World War II.
Japan's new stimulus package amounts to 3.1 percent of Japan's gross domestic product and will be the largest ever for a single year, surpassing former Prime Minister Keizo Obuchi's JPY 8.5 trillion stimulus during the Asian financial crisis in 1998. Japan's Prime Minister Taro Aso has unveiled two packages totaling JPY 10 trillion since he took office in September.
The U.S. Labor Department said jobless claims fell to 654,000 from the previous week's revised figure of 674,000. Economists had expected jobless claims to edge down to 660,000 from the 669,000 originally reported for the previous week.
Meanwhile, a report from the Commerce Department showed that the U.S. trade deficit narrowed to $25.97 billion in February, from the previous month's shortfall of $36.2 billion.
A third report released during the morning indicated that import prices rose 0.5 percent in March following a revised 0.1 percent decrease in February. The increase in import prices marks the first price growth in eight months.
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